Application fraud increases by 23%

by Gill Montia

Story link: Application fraud increases by 23%

CIFAS, the fraud prevention service, has reported an increase in the numbers of people lying on application forms in an attempt to secure credit.

The official figure increased 23% in the first nine months of this year, as compared with the same period of 2006.

Cases of “application fraud” reported by banks and building societies totalled 57,321 during the period, putting this type of offence ahead of incidents of identity fraud.

According to Peter Hurst, chief executive of Cifas, “Our statistics for the first three quarters of the year show a clear and worrying trend. Fraudulent activity is at an all-time high. Fraudsters are becoming more sophisticated and fraud departments are working harder than ever to protect their organisations from the onslaught.”

Taking a closer look at the nature “application fraud”, nearly half of those involved fail to disclose an address which would reveal adverse credit information, or do not admit to County Court judgments or an undischarged bankruptcy.

Around 10% lie about their income to try to secure more money from a bank or building society, using fake documents to do so.

Fraudsters in this group are likely to be exposed by data-sharing mechanisms within the financial services sector, and this can have serious consequences for obtaining credit in the future.

Identifying false documentation is more difficult than tracking down undeclared county court judgments, because credit reference agencies hold no information about a person’s salary or other income.

Fake documents are available online, with websites offering “duplicate” bank statements, payslips and P60s. These websites are hard to close because of legal loopholes.