Current accounts overtake mortgages as fraud of choice

http://www.theguardian.com/money/2015/jul/02/current-accounts-overtake-mortgages-as-of-choice

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Current accounts have become the most targeted financial product by fraudsters for the first time as increasing number of criminals seek to take advantage of a faster bank account switching process.

At least 89 in every 10,000 applications for a current account are now made by an imposter compared to 77 in every 10,000 applications a year ago, according to credit reference agency Experian.

It is the first time current accounts have been a bigger target for fraudsters than mortgages. Mortgage application fraud, where individuals falsely inflate their income, accounts for 83 out of every 10,000 home loan applications.

The rise has been driven by a massive increase in identity fraud. In the first quarter of 2015 almost half of all current account fraud was attempted by people who had stolen an identity, compared to less than a third at the start of 2014.

“Fraudsters have shifted their attention to current accounts in recent times and are using these almost as a trojan horse into the bank,” said Nick Mothershaw, UK&I director of identity and fraud at Experian. “Once they have got an account they can milk the banks who will, in time, given them a credit card or loan.”

Once they have this initial line of credit it provides the fraudster with an improved credit score enabling them to increase their chances of gaining more credit. Tighter lending rules have meant fraudsters now need to go via a current account to increase their chances of gaining access to credit.

All of this has been escalated by the current account switch service, which makes it much quicker to get a bank account.

The service, launched in September 2013 and backed by a multimillion pound advertising campaign, guarantees that anyone who changes bank accounts will have direct debits and payments transferred between providers within a week. In the year to March 1,136,251 people switched accounts – a 7% rise on the previous year.

“The current account fraud controls are still the same as they were but more fraudsters are having a go and when they are successful are getting through quicker,” Mothershaw said.

However, he adds that the new fraud figures are for detected fraud. “Increased detection rates are showing that [lender’s] systems are clearly holding up,” he said.