UK bank account and loan fraud is on the rise



Financial Fraud News

Bank account and credit fraud rose sharply in the UK during the pandemic as criminals sought to target UK businesses and consumers in isolation and use government support schemes.

According to Experian, credit fraud rates rose 40% in the second quarter, the highest rate in three years. This is almost two-thirds more than in the same period last year.

Credit fraud – where customers apply without intent to pay or on better terms using false information – has increased by almost a fifth.

Using data from the National Fraud Prevention Service, which tracks banking app fraud, Experian also reported that the number of fraudulent savings account openings was three times the previous quarter and five times the same quarter last year.

Eduardo Castro, Head of Identity and Fraud at Experian UK&I, said there has been a “significant increase in fraud.”

“Scams linked to the pandemic, such as tricking people into transferring money over the Internet, have increased, and scammers usually try to open savings accounts to get these deposits,” he said.

UK banks are also gearing up for a wave of loan fraud in the next 18 months by criminals using the government’s £ 47.4bn coronavirus support scheme.

Government-backed loans of up to £ 50,000 were available from major banks with only minor checks on applicants, which many bankers expect will cost the taxpayer billions of dollars in fraud and nonpayment.

Bankers told the Financial Times that so far between 5% and 10% of businesses using this scheme have not paid payments, which could amount to up to £ 5 billion.

Most of these losses are in companies that have gone bankrupt or had trouble during the pandemic, not in fraud. Senior bankers told the FT that they are concerned that new cases of fraud will be uncovered following the end of government support measures such as the layoff scheme.

Experian said the scammers used bank accounts to facilitate criminal behavior. The growth has also been driven by better technology that has helped businesses detect more fraud cases.

Castro said the fraudsters believed that a savings or checking account was a “relatively simple” way to obtain and quickly distribute illicit funds, as well as provide access to other financial services.

He added: “New technologies are helping firms identify potentially fraudulent activity right at the start of the application and account opening process.”


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