Cifas figures show UK fraud on the rise

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LONDON - Recorded incidents of fraud in the UK rose by 16% during 2008, as the tightening credit markets prompted criminals to turn to alternative methods of financial crime, according to the latest figures from fraud prevention service Cifas.

The overall increase in fraud was fuelled by a 207% year-on-year rise in facility takeover fraud - where a third party gains access to a legitimate account through 'phishing' emails or interception of credit card details - according to Cifas.

Kate Beddington-Brown, head of communications at Cifas, described the increase as "truly alarming" and said "fraudsters are clearly adapting to current conditions" because "they know that lending criteria have become more stringent as a result of the credit crunch, and that application fraud is likely to be unsuccessful."

A lack of available credit has also fuelled a rise in identity fraud - although the number of victims has simultaneously fallen. Cifas said this is because fraudsters are conjuring up fictional, yet creditworthy, identities rather than trying to impersonate real people who could be rejected by lenders.

"Our customers and government/industry statistics tell us fraud has risen steadily for years now," says Andre Edelbrock, chief executive officer of anti-fraud software vendor Ethoca, based in Ireland and Canada. "With much of the world in recession, the effects on fraud are likely to be pronounced. However, one should not ignore a greater and more harmful underlying development: criminals have realised that working together ensures greater rewards. Until we truly embrace the collaborative dynamic and confront them together, the figures will continue to rise - recession or not."