Reported cases of business fraud increase by 16%

Fraud prevention service, Cifas has released its annual Fraudscape report, detailing the latest data and intelligence recorded by Cifas members during 2021. The report reveals that a new case of fraudulent conduct was filed by organisations every 90 seconds on average, with over 360,000 cases recorded to the National Fraud Database – an increase of 16% on 2020. As a result, Cifas members saved over £1.5bn through prevented fraud losses in 2021.

Cases involving identity fraud increased by nearly a quarter (22%) in 2021 when compared to the previous year, with over 226,000 cases recorded to the National Fraud Database.

Banking and plastic cards were hit hardest by criminals abusing stolen details to apply for products and services. Fraudsters also focused their attention on loan products which saw a 39% increase in fraudulent activity, and are likely to continue to be targeted as a response to the rise in living costs

A fifth of cases recorded to the National Fraud Database in 2021 relate to the misuse of facilities, which has grown by 17% to over 79,000 cases.
A large number of misuse cases related to bank accounts, with nearly three-quarters (72%) showing behaviours indicative of money mule activity, which increased by nearly a quarter (24%) to over 50,000 cases. Of these cases, a large number were aged 21-30 years – up 32%. There was is also a notable rise in those aged under 21, with cases up by 19%.

The majority of the remaining cases filed to the National Fraud Database were recorded for facility takeover fraud, with 37,000 instances recorded to the Database. Criminals focused their efforts on gaining access to existing accounts, particularly in relation to online retail and telecoms products. 2021 also saw a shift towards gaining access to existing plastic card accounts, which rose by a nearly a fifth (19%).

Nearly 270 cases involving employee or job applicant fraud were filed to the Internal Fraud Database in 2021. 2 out of 5 of these were in relation to dishonest actions by staff, such as by stealing cash or equipment from their employer. There was also a 10% growth in unsuccessful attempts made by job applicants who had lied in their application, with most of these individuals attempting to hide adverse credit or employment histories.

Mike Haley, CEO of Cifas, said “Our latest figures show that businesses and consumers are currently facing a tsunami of fraud, and unfortunately I think things may get worse before they get better. The predicted rise in the cost of living will give criminals new opportunities to commit fraud, and I expect that consumers will be bombarded by increasingly sophisticated phishing attempts, including fake job offers, money-making opportunities and offers that are too good to be true.”

“Businesses will also find themselves under increasing attack from fraudulent activity, with criminals increasingly looking for vulnerabilities in systems and processes. An attempt of identity fraud is made, on average, every two and a half minutes against businesses, and sadly when these attempts are successful, criminals can go on to use the proceeds to commit other criminal offences – and even finance terrorist activity.”

Amber Burridge, Head of Fraud Intelligence for Cifas, said “Members of the public are at more risk than ever of falling to fraud and scams. It is important that they take proactive steps to protect themselves by thinking carefully when receiving an unsolicited call or email asking for money or financial details.”

Ignatius Adjei, Director, Forensic Data Analytics at KPMG UK said “The rise in fraud cases – particularly the rise of identity fraud and ‘misuse of facility’ – is not surprising. The pandemic-related changes, the acceleration of digitalisation and the rise of new payment channels have provided new opportunities for fraudsters….and it is likely only going to get worse before it stabilises. The sheer speed of businesses’ adoption of new digital payment and customer interaction methods is outpacing enhancements in fraud prevention measures that are necessary to manage and mitigate potential fraud threats. As a result, industries are playing catch-up.”

“Looking ahead, the arrival of new platforms and environments such as 5G technology and the emergence of the Metaverse will introduce further fraud risk from organised crime groups in the UK and internationally, so it is critical that digital authentication solutions of the future are versatile enough to keep up.”

Helen Morrissey, Senior Pensions and Retirement Analyst at Hargreaves Lansdown said “The cost-of-living crisis will be boom time for fraudsters – and young people and older people will be particularly at risk. Cifas data shows fraud cases are back on the rise and no-one is safe as fraudsters target every aspect of our financial lives.”

“Scammers are shape shifters and change their tactics depending on the situation. They adopt increasingly sophisticated strategies to target victims. We are seeing a rise in credit cards being used fraudulently as well as loan products being targeted. In 2021 fraudulent attempts to access loan products was up 39% and while many of these were declined there are still a huge number of people impacted. Older people – aged over 61 are disproportionately affected by this kind of crime.”

“This is something that is only going to get worse as the cost-of-living crisis deepens and we are forced to use more credit and debt to meet our costs. At a time when so many people are already struggling the prospect of being scammed is another worry people just don’t need.”

“The rise in scam activity also means criminals need accounts to transfer funds from these scams, so we are also seeing the misuse of bank accounts on the rise – up 17%. Almost three-quarters (72%) of this is related to ‘mule activity’ where stolen funds are placed in people’s bank accounts before being transferred elsewhere.  Young people have been particularly targeted, particularly those aged 21-30, but there has also been a rise in activity among the under 21s. Many of them are approached via social media.”

“Fraud can take a huge financial and mental toll on the victims and their families – not everyone is able to recover the funds stolen and this can have lasting impact. Increased awareness of this activity is vital if we are to protect ourselves from the scammers.”