Identity fraud remains high ahead of difficult quarter

SME Publications/ SME XPO 2024

Complaints to the Financial Ombudsman Service (FOS) regarding identity fraud soared over the Covid-19 pandemic, finishing 2020 at 44% higher than 2019, according to data obtained through a Freedom of Information (FOI) request by ID-Pal, a leading global identity verification provider. Despite seeing a decrease the following year as normality returned post pandemic, numbers in 2021 are still over 18% higher than pre-pandemic in 2019.

The outlook for the final figures for 2022 is notable, with figures so far following a trend last seen in 2019. If identity fraud, which occurs when personal details are stolen and subsequently used to commit fraud, continues at this pace, 2022 will see a 10% increase in complaints compared to 2021.

Through identity fraud, criminals can open or take over existing bank accounts; apply for and obtain credit cards, loans and state benefits; place orders; take out mobile contracts; and apply for and obtain genuine identity documents, including passports and driving licenses in their victims’ names.

The identity fraud complaints results shared with ID-Pal by the FOS are tracking with overall figures on fraud, as revealed this month in the UK Finance’s Half Year Fraud Update. Their report showed fraud levels across the UK falling in the first half of 2022, but the threat continues to persist as fraudsters look for new ways to exploit vulnerable people.

As the cost-of-living crisis takes hold, fraud rates are expected to rise again throughout this quarter and into 2023. Today’s figures show the importance of financial institutions and other organisations putting proper controls in place to stop this fraud at the source.

Colum Lyons, CEO and founder of ID-Pal, observes: “Fraudsters thrive on instability, so as the cost-of-living crisis grows, it follows that fraud will also increase. Therefore, it is critical that financial institutions protect their organisation, team and customers from fraud of any type without adding friction to their services in doing so. The results of our request show just how easy it is for criminals to commit identity fraud. If they succeed in opening up bank accounts these are then used for illegally sourced funds. Once a criminal is done with an account, they can disappear.

“The results also show that identity fraud cases have reduced since the pandemic, proving the dial can be moved in the right direction. Newer generations of fraud prevention technology exist that are adaptable and customisable, like ID-Pal, so the excuse that the solution to prevent fraud can’t be integrated into an organisation easily is no longer acceptable.”

SME Publications/ SME XPO 2024