[Dave Birch] Browsing the March 2012 “Banking Technology”, I came across some analysis of the record UK fraud figures for last year. These show that the biggest fraction of fraud, identity fraud, grew 10% (fraud overall grew 9%) to account for almost half of all detected frauds. The biggest growth, incidentally, was in account takeover fraud, which grew 18% (boosted, as I understand it, by a big increase in telephone phishing). I made a note at the time, and this came to mind when the good people at Experian invited me along to their annual Identity and Fraud Forum. They asked me to come along and talk about the medium term future for retail payments, but naturally most of the other talks were about, well, identity and fraud.

You can read about all of this in Experian’s free fraud report, but I’d like to highlight one of the trends that I heard. Not in card fraud, as the card fraud hotbeds are the same as always – Reading, for example, and Luton – and it is by and large a London-centric kind of fraud with the highest incidence in the suburbs (I guess this where people with the cards with high limits live?). But another thing I noticed in the figures were that people on benefits have their identities stolen at a rate considerably higher than their incidence in the general population. I suspect that this is because their identities are being stolen by other benefit claimants to make fraudulent claims.

Nigerian couple tried to claim £3.8m in ‘eye watering’ benefits scam… Thomas used 1,400 stolen identities to complete 2,495 handwritten tax and benefits claims forms… HMRC suspicions were raised when he used the same address for all the claims

[From Nigerian couple tried to claim £3.8m in ¿eye watering¿ benefits scam using 1,400 identities | Mail Online]

Astonishing. It took 2,495 claims from the same address to raise suspicions. Shouldn’t like, half a dozen cause alarm bells to ring somewhere? Fortunately, we won’t have to worry about this sort of thing for too much longer.

Private security companies will be commissioned to develop a system of “identity assurance” to check that only real claimants can get benefits.

[From Cyber attacks threaten welfare reforms, ministers warn – Telegraph]

I could suggest a series of rudimentary checks to begin with, like limiting the number of claims from the same private address to say, a thousand or so. But my point is that two things are being confused here: working out who you are and working out whether you are entitled to benefit (most benefit fraud is not identity fraud but misrepresentation of circumstances: not lying about who you are, but lying about whether you’ve been working or having children or being disabled or whatever). Working out whether you are real is only the first step in fixing this problem.

As an aside, one of the reasons why I enjoyed the Experian event so much was that their after dinner speaker was Bennett Arron, the comedian who tells the fascinating and funny (and slightly scary) story of how his identity was stolen and I got to chat to him as well as listen to him speak. When he talks about how easy it was for fraudsters to steal his identity and cause no end of misery, he is talking about something that happened a few years ago. But you’ve got to ask yourself how much has changed? I listened to a talk from a couple of ex-policemen talking about how they tracked down some terrorists by following their money trail, and it seemed trivial for the terrorists to obtain large numbers of bank accounts, credit cards and mobile phones. We haven’t even started to do something about identity yet.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers

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