Experian Fraud Report April 2011

8/2/2019 Experian Fraud Report April 2011

1/20

April 2011

The Fraud Report


2/202 - The Fraud Report April 2011

1. Executive summary page 3

2. Introduction page 4

3. Key raud trends page 5

4. Proiling the irst-party raudsters page 10

5. Victims o raud page 14

6. Fighting raud in a multi-channel world page 17

Contents



1. Executive summary

Fraud in the UK is a growing billion-pound illegal business with raudsters

resorting to innovation and inventiveness, targeting any perceived

weaknesses in the system

New Experian analysis reveals that raud rates are rising ast and thedeceptions becoming ever more ingenious

20 in every 10,000 applications or credit and other inancial services made in

2010 were unearthed as raudulent an 11 per cent rise on 2009

More than hal o raud is now down to irst parties where an individual

misrepresents their personal circumstances to secure credit or other

inancial services

Over 90 per cent o irst-party raud cases involve some orm o data massage

The economic climate has uelled a mortgage and automotive raud boom. Pay

reezes, job cuts and business closures are likely to have contributed to therise in irst-party raud

The biggest raud culprits are in the lowest income groups, however, there

are also higher-than-average incidents o raud amongst young, proessional,

university educated people

Mortgage raud was up by 13 per cent to 32 in every 10,000 applications in 2010

Automotive raud rates also saw a big leap. 38 in every 10,000 applications or

car inance were discovered to be raudulent in 2010, up 31 per cent on 2009

The Insurance sector continues to ace a stressed-consumer irst-partyraud challenge

Non-disclosure remains a major cause or concern, but both home and car

cover providers continue to wrestle with staged accidents or incidents.

Evidence has also emerged o third-party identity raudsters operating at the

claims stage

Identity raud remains a signiicant threat, with attacks becoming

increasingly sophisticated

With identity veriication, raud prevention tools and tighter controls making

it increasingly tough to garner raudulent credit, raudsters are increasingly

looking to open bank current accounts as a gateway to the more lucrative

prize o credit cards and loans

The wealthiest sections o society continue to be targeted most requently,

alongside those living in shared and rented accommodation

London is the identity raud capital o the UK. However, there is evidence

to show that identity raudsters are migrating westwards and increasingly

targeting residents o commuter towns, including Reading, High Wycombe

and Basingstoke



Fraud, be it individuals misrepresenting their own

circumstances to obtain services that would otherwisebe out-o-reach, or the more sinister threat o identity

raudsters masquerading as someone else, continues

to be a major cause or concern amongst the credit and

wider inancial services community.

At Experian the data, technology and expertise we provide is helping

many leading organisations across a wide range o sectors to protect their

reputations and bottom lines.

Fighting raud is a challenge we relish at Experian, and the data, technology

and expertise we provide is helping many leading organisations across a wide

range o sectors to protect their reputations and bottom lines.

For organisations providing inance and goods on credit, or a wider range

o inancial services, the requirement or robust raud deences should be a

undamental part o their corporate DNA.

Organisations across these sectors have become increasingly sophisticated

in how they combat raud, with robust tools to veriy the identities o those

they are dealing with, strong measures at the point o application and

innovative analytics to monitor or signs o organised raud, account takeover

or other suspicious activity within their open account base.

The journey does not stop however. The raud threat continues to evolve and

adapt, targeting any perceived weaknesses in the system. Organisations,thereore, need to continue enhancing their procedures or validating and

veriying identities, and ensure that their raud prevention and detection tools

are best in class.

They key, however, is to provide (and enhance) the deences consumers

expect as standard while at the same time ensuring that they can access your

business on their terms and at their convenience.

Drop-os due to complicated and intrusive raud deences mean lost

business. Consumers will select providers that make their lives as easy as

possible, while still making them eel sae and protected.

This report provides an overview o how raud changed in 2010, the key trends

aecting the credit and wider inancial services industry now, and some o the

steps it should take to ensure it can achieve robust deences with an optimum

customer experience in the uture.

2. IntroductionNick Mothershaw, Director o Identity and Fraud, Experian



3. Key fraud trends

In the UK there is a multi-billion pound industry that has thrived throughout

the recession and its atermath. Unortunately it is the business ocommitting raud.

New Experian analysis o inormation rom the National Hunter anti-raud

data sharing system and its Insurance Hunter database, detailed in this

report, reveals that raud rates are rising ast and the deceptions becoming

ever more devious.

Key indings are:

Asignificantriseinfirst-partyfraud,drivenbyeconomicpressures

IdentityfraudstersseekingtoopencurrentaccountsasdefactoTrojan

horses to target credit products

Insurerscontinuetofaceafirst-partyfraudchallengeandidentity

raudsters operating in this sector are becoming more elaborate

The trend is clear: 20 in every 10,000 applications or credit and other inancial

services made in 2010 were unearthed as raudulent an 11 per cent rise on

the 18 in 10,000 recorded in 2009.

The thrust o this is down to irst-party raud up rom 39 per cent in 2009 to

56 per cent in 2010 where an individual paints a knowingly alse portrait o

their personal circumstances in an attempt to secure credit or other inancial

services. Over 90 per cent o irst-party raud cases recorded in 2010 involved

some orm o misrepresentation o personal inormation

Yet the menace o third-party identity raudsters has not subsided; in act, ithas turned to ever-greater stealth, with bank current accounts targeted as a

gateway to the more lucrative prize o credit cards and loans.

Economic climate uels mortgage and automotive raud boom

Fraud has not been immune to allout rom the recession and its atermath.

As pay reezes, job cuts and business closures hit peoples pockets hard in

many parts o the country, so their perception o prosperity changes.

This has uelled aspects o raud and changed its character, with a rise

in irst-party raud rom certain parts o society in particular rom those

described by Experians Mosaic classiication as:

LiberalOpinions,young,professionalpeoplewhohavebenefitedfrom

a university education a group that would have previously shunned

such behaviour

UpperFloorLiving,typicallyyoungsingleslivingonlimitedincomes,

renting small lats rom local councils or housing associations

TerracedMeltingPot,youngpeoplewithfewqualificationsworkingin

relatively menial occupations



While lower income groups are more generally associated with these typeso raud, it is being increasingly committed by atypical groups o people; theirlikely motive, during economic adversity that is pressurising their nances onall sides, is that their behaviour is only a sense o bending the system. It is

possible that those perpetrating these rauds do not consider this activity tobe a crime.

Whatever their actions today, it is possible that many o these part-timeraudsters eel that theyll be able to pay it back at some point. For example,their ailure to include a ormer address at which they incurred a negativecredit history wont incur any guilt or sense o embarrassment, rather a senseo entitlement.

The wider impact o these actions is not seen or considered, despiteestimates rom the Association o British Insurers that insurance raud addsan extra 44 to the average households annual insurance bill 1.

Mortgage raud, up by 13 per cent to 32 in every 10,000 applications (it was 28in every 10,000 in 2009) underlines this impact. First-party raud made up 97 percent o mortgage raud last year (ticking up rom 93 per cent in 2009), and inthe vast majority o cases, individuals either infated the prospects or statuso their employment and personal nances, or attempted to conceal a patchyor poor credit history.

This high number was also bolstered by sel-certicated mortgage lendingrule changes that impacted sel-employed borrowers without the requisitenumber o years accounts as proo o creditworthiness. Faced with achoice o no loan, a less competitive rate or a more aordable mortgage viamisrepresentation o job status, many choose the latter.

1 Source: ABI, 29-Dec-10: http://www.abi.org.uk/Media/Releases/2010/12/Home_cheat_home_.aspx

Product 2006 2007 2008 2009 2010

Automotive

inance

Frauds per 10,000 applications 25 21 32 29 38

Change on previous year - -15% +54% -11% +31%

Credit card Frauds per 10,000 applications 45 29 21 19 19

Change on previous year - -36% -26% -12% +4%

Current

account

Frauds per 10,000 applications - - - 18 23

Change on previous year - - - - +25%

Insurance Frauds per 10,000 applications 2 5 9 9 9

Change on previous year - +195% +57% +9% -5%

Loan Frauds per 10,000 applications 11 9 7 5 7

Change on previous year - -18% -23% -33% -57%

Mortgage Frauds per 10,000 applications 15 18 26 28 32

Change on previous year - +17% +46% +6% +13%

Savings

account

Frauds per 10,000 applications - - - 23 7

Change on previous year - - - - -68%

Figure 1: Annual raud rates by product type

Source: Experian, National Hunter and Insurance Hunter



Automotive raud rates also saw a big leap. 38 in every 10,000 applicationsor car nance were discovered to be raudulent in 2010, up 31 per cent onthe year beore. This increase was higher than or any other type o nance,although it is likely that the increase the number o genuine applicationsbrought about by the Government scrappage scheme in place throughout

most o 2009 minimised raud rates or the year and infated the year-on-yearchange in Experians raud index.

More than 80 per cent o automotive raud is rst-party, with more than halmotivated by a desire to conceal adverse credit histories, and theres a newthreat on the block in the guise o corporate identity thet, whereby individualstry to pass themselves o as being associated with a legitimate company in abid to obtain trade nance.

Third-party identity raudsters returning to cards and loansThe prominence o rst-party raud might appear to overshadow the moretraditional third-party element o identity criminality, yet the bread and buttertarget o old-ashioned credit card and loan identity raud is resolutely stillin ashion.

Experian data suggests that identity raudsters are increasingly deployingstealth tactics to do so: opening a current account as a spring board to diveinto other products oered by the same nancial institutions e.g. overdrat,credit cards, loans or even using it as collateral to tempt other banks orbuilding societies.

The current account has come into its own, with raudsters targeting it as aTrojan horse into nancial services companies, as identity verication, raudprevention tools and tighter credit controls make it increasingly tough togarner raudulent credit.

Controls or current accounts have not, historically, tended to be as tight as

mainstream credit products because the risk o nancial loss is much lower.

Because o this, raudsters see current accounts as an easier target thancredit products. They attempt to inveigle their way into a bank account, wintrust with seemingly genuine behaviour timely payments and accountmanagement, or instance and then use these established relationships inan attempt to exploit oers o overdrats, credit cards and loans.

It is also a case or concern that some current accounts are being openedas a simple laundering service acting as a ront or raudsters to channelin money illegally made rom raudulently obtained card and loans; bytranserring it to a genuine current account, they can then release the cashwithout the usual diculties o gaining access to stolen money.

Although the data or current account analysis only stretches back tothe second quarter o 2009, our report nds a 25 per cent rise in raud approximately 40 per cent o current account raud is down to third-partyactivity. And worryingly, as part o this rise, a small but stubborn number(roughly two per cent) o these rauds stem rom elaborate ruse by tenantswho claim to own properties they rent in order to boost their chances osecuring a credit acility. Almost nine per cent o identity rauds attempted in2010 involved alse residential or owner/occupier status.

However, it is not only current accounts in the ring line. Mortgage providerstoo express anxieties at third-party organised criminal gangs running complexand obscure raud rings.

Notwithstanding the (thankully) ewer cases, as it takes a great deal o time,labour and resources to devise such projects, exposure to loss on each casecan be huge.



The greatest problems emerge when a proessional party a solicitor, broker

or even member o sta within a lender is part o the deception. Uncovering

such raud can cause huge headaches or all parties, given the skills o each

proession and their capacity to easily hide the data within high volume turnover.

Actual third-party credit card raud gures stabilised at 19 in every 10,000

applications in 2010 having dropped every year since 2006 and accounted or

more than 80 per cent o card rauds, with mail interception to glean personal

details the most common method.

By contrast, ater three similar consecutive years in which raud rates ell, raud

rates or personal loans shot back up, with seven in every 10,000 loan applications

fagged as raudulent, up rom ve in 2009.

This was in part due to the general trend o a rise in rst-party raud; with

personal loans, the numbers hiding a less than robust credit history by omitting a

previous address during an application swelled to 30 per cent - a doubling.

However, identity raudsters were still responsible or the vast bulk

approximately 60 per cent o loan raud attempts last year and, as with cards,

using current address raud as the preerred point o attack.



Insurance sector ace stressed consumer rst-party raud challenge

The insurance industry also has a raud challenge to meet, as it continues to be

targeted by nancially stressed and struggling consumers.

Despite rauds attempted against insurers staying airly stable at nine in every10,000 applications, or the third year running rst-party raudsters made up

more than 90 per cent o those detected at policy application stage or both home

and motor insurance.

In each, the problem o non-disclosure remains a major cause but both home and

car cover continue to wrestle with the serious issues o staged accidents

or incidents.

At the claims stage or home insurance, more than a quarter (27 per cent) o

raud cases uncovered involved staged incidents typically a aked burglary;

items added to a list o genuinely stolen goods; or electrical goods accidentally

dropped in order to claim new or old while a urther 20 per cent were multiple

claims with conficting evidence. Non-disclosure made up almost 80 per cent ocases in 2010.

For motor insurance, the gures make or equally sobering reading.

Non-disclosure o previous motoring claims accounted or more than a third (34 per

cent); convictions (14 per cent); and ronting where a parent or older, lower-risk

riend is named as the main driver but never drives counted or eight per cent; and

staged accidents some seven per cent.

Worryingly or insurers, evidence has also emerged o a third-party raudster at the

claims stage. More than a th (21 per cent) o raudulent motor insurance claims

involved staged accidents where critically the raudster then attempted to claim

on insurance policies previously obtained using someone elses identity.

Figure 2: Quarterly raud rates by product type




More than hal o raud is now down to irst parties where an individual wilully

and oten artully misrepresents their personal circumstances to secure creditor other inancial services otherwise out o their reach.

This is a major shit in trend, rom 39 per cent in 2009 to 56 per cent in 2010, and

while certain culpable groups it an expected proile o who might typically

be drawn to commit raud throws up an intriguing new picture where certain

segments o society are engaged in an illegal activity in which ew would be quick

to categorise them.

The biggest raud culprits emerged rom the demographic known by Experians

Mosaic classiication as Upper Floor Living.

Typically on limited incomes, renting small lats rom local councils or housing

associations, many live among neighbours suering severe unemployment orsickness that exerts a huge negative impact on their quality o lie.

A common problem is poor access to consumer credit because o patchy credit

histories. Obtaining aordable insurance is also a struggle.

In such adverse circumstances, raud might be considered as a relatively easy

way to bypass such hurdles, with the act that it is a criminal oence oten

overlooked due to the victim being a large organisation rather than a person.

4. Profiling the first-party fraudsters

Mosaic Group All Automotive Credit card Current

account

Loan Mor tgages Insurance

Upper Floor Living 383 271 240 124 213 128 73

Liberal Opinions 170 185 215 161 217 133 86

Terraced Melting Pot 157 309 315 165 290 245 218

New Homemakers 144 157 153 192 154 121 95

Claimant Cultures 111 140 77 65 97 63 115

Suburban Mindsets 97 76 90 124 80 134 143

Alpha Territory 78 36 52 124 30 163 173

Careers and Kids 76 53 93 129 79 114 86

Ex-Council Community 73 78 41 56 69 63 108

Industrial Heritage 58 51 51 70 79 60 85

Rural Solitude 47 26 51 76 46 84 58

Proessional Rewards 42 19 20 78 22 89 86

Small Town Diversity 40 36 31 56 30 45 73

Elderly Needs 29 29 32 43 47 18 30

Active Retirement 26 27 27 12 10 29 35

Figure 3: Propensity to commit irst-party raud in 2010




Another group proile bearing limited income and opportunities that also

scored high, attempting irst-party raud at nearly twice the national average

rate in 2010, is Terraced Melting Pot.

As its name suggests, this is a hotch-potch o lower-income workers,

minorities and recent immigrants who tend to sport ew qualiications and are

oten employed in menial or routine jobs.

The surprise in the irst-party raudster proiles is the Liberal Opinions

demographic. This group ranks as the second biggest raud perpetrators

overall relative to its size. It contains plenty o young, proessional people

with a university background whose careers cover politics, entertainment, the

arts, design, university education and the web, those in this group have much

to lose rom complicity in raud.

Its high ranking suggests how a post-credit-crunch environment and earul

reaction to recessionary orces can propel some relatively well-o people

into crime, in a bid to possibly either maintain a liestyle gained in the less

adverse economic climate or solve growing inancial problems caused by

todays greater pressure.

Town/territory 2010: Attempts per

10,000 adults

2009: Attempts per

10,000 adults

Year-on-year

change

East Ham 29.33 7.03 +317%

Stratord 14.45 3.57 +305%

Hounslow 13.22 3.61 +266%

Woolwich 12.93 6.16 +110%

Ilord 11.78 4.84 +143%

Walthamstow 10.28 3.55 +190%

Birmingham Central 10.27 5.02 +104%

Slough 9.86 2.95 +234%

Ealing Broadway 9.68 3.07 +215%

Harrow 8.84 2.85 +210%

Figure 4: Top ten irst-party raud hotspots





10,000 adults

2009: Attempts per

10,000 adults

Year-on-year

change

Greater London 7.45 2.71 175%

North West 3.05 1.61 90%

West Midlands 2.90 1.43 103%

Yorkshire & Humber 2.48 1.14 117%

South East 2.35 1.03 128%

East Midlands 2.16 1.06 105%

Wales 2.03 0.87 134%

Scotland 2.00 1.06 88%

East Anglia 1.97 0.68 191%

North 1.92 0.93 107%

South West 1.49 0.78 92%

Northern Ireland 0.74 0.71 4%

Figure 5: First-party raud rates by region


Figure 6: First- v third-party (identity) raud risk by Mosaic Group in 2010


0

50

100

150

200

250

300

350

400

450

ActiveRetirement

AlphaTerritory

CareersandKids

ClaimentCultures

ElderlyNeeds

Ex-CouncilCommunity

Industrialheritage

LiberalOpinions

New

Homemakers

ProfessionalRewards

RuralSolitude

SmallTownDiversity

SuburbanMindsets

TerracedMeltingPot

UpperFloorLiving

Propensity to commit first-party fraud Risk of being targeted by identity fraudsters



Figure 7: First-party raud map o the UK 2010


This insecurity is perhaps signiicantly underscored by above average

attempts at Automotive, Mortgage and Insurance raud committed by Alpha

Territory types, those at the apex o wealth and power with very high incomes.

When desire or need to commit raud rises this high up social strata, the

impact o economic orces on crime look very clear.

Geographical analysis reveals that Londoners attempt more irst-partyraud than residents o the rest o the UK. There were seven irst-party raud

attempts or every 10,000 adults in Greater London during 2010, more than

twice the rate recorded in the next busiest region or irst-party raud, the

North West o England.

East Ham was the busiest UK town/territory or irst-party raud in 2010,

experiencing 30 attempts or every 10,000 adult residents. This was double

the rate o Stratord, the next busiest area. Hounslow, Woolwich, Ilord and

Walthamstow also averaged more than 10 attempts or every 10,000 adults.

Outside o London only Birmingham Central could match this level o irst-

party raud activity.



5. Victims of fraud

Who are the most tempting targets in identity raudsters crosshairs?

Those who live in shared or rented accommodation (greater exposure

to attack)

Those with a generous chunk o disposable income (juicy rewards)

Individuals whose general aluence makes them a key overall target

With an overall identity raud risk score o 301, Alpha Territory group members

were three times more likely to be targeted than average in 2010. Containing many

o the most wealthy and inluential people in Britain, as their oten visible wealth

and ability to access substantial credit lines mark them out as signiicant targets

or the organised criminal element.

In particular, they are marked out as the most likely to be targeted or loan raud,

being targeted at almost eight times the average rate.

The second most at risk demographic in 2010 was Liberal Opinions, a well-heeled

group o young proessionals whose dependence on the internet and tendency to

live in shared accommodation and smart rented lats, many o which experience a

rapid turnover o tenants, exposes them and their personal inormation to a wide

range o opportunistic and criminal raudsters. With a risk score o 208, those in

this segment were targeted at twice the overall rate.

Mosaic Group All Automotive Credit card Current

account

Loan Mor tgages Insurance

Alpha Territory 301 281 224 217 770 179 34

Liberal Opinions 208 186 240 136 127 284 114

Upper Floor Living 175 242 150 186 103 195 256

Terraced Melting Pot 138 190 118 82 108 343 240

New Homemakers 135 147 161 130 93 43 122

Proessional Rewards 121 111 104 93 85 62 59

Careers and Kids 93 83 90 233 116 66 21

Suburban Mindsets 92 77 89 17 112 125 172

Rural Solitude 57 60 52 44 70 0 82

Small Town Diversity 50 26 64 88 43 0 0

Industrial Heritage 49 41 56 130 70 68 81

Ex-Council Community 45 49 48 44 32 29 111

Active Retirement 40 27 62 44 12 0 0

Claimant Cultures 34 49 32 186 27 49 117

Elderly Needs 24 22 32 0 12 0 20

Figure 8: Risk o being targeted as by identity raudsters in 2010


2 Risk scores compare the volume o rauds registered against a group with the size o its

population to indicate their propensity to attempt irst-party raud, or to be targeted as a victim o

third-party / identity raud. Each score can be compared to a national average o 100.



Conspicuous alongside these more aluent groups was the Upper Floor Living

demographic, typically young, single people on limited incomes, renting small lats

rom local councils or housing associations. This group has become a more popular

target over recent years as some raudsters have sought to perpetrate higher

volumes o low value rauds as a way o attempting to circumnavigate increasingly

sophisticated raud deences.

For security against identity raud, the saest are those who that use the internetleast, tend not to access credit and whose circumstances make them less accessible

to raudsters. The Active Retirement group, those over 65 who have made a deliberate

attempt to distance themselves rom the noise, diversity and disorder o large cities,

and Elderly Needs, large numbers o pensioners that can no longer engage in the level

o physical activity that younger retired people take or granted.

In particular, the reliance o the Elderly Needs demographic on sheltered

accommodation and nursing homes makes them extremely diicult to be targeted,

although Experian is aware o cases in which such groups have been deliberately

targeted by a carer because o this.

London continues to be the identity raud capital o the UK, with residents three times

more likely to be targeted than the national average. Seven in every 10,000 Londoners

were targeted by identity raudsters in 2010, down very slightly on 2009 levels.

The problem was most acute in Woolwich and East Ham, which despite attempts

alling by more than 20 per cent year-on-year still saw identity rauds targeted

against more than 15 in every 10,000 residents.

There is, however, evidence to show that identity raudsters are migrating westwards

out o London and increasingly targeting residents o commuter towns. The number

o identity rauds attempted against residents o Reading, trebled in 2010 to more

than nine in every 10,000 residents, catapulting it into the UKs top ten hotspots or the

irst time. Similar levels o identity raud activity were recorded in High Wycombe and

Basingstoke, the latter seeing attempts increase 281 per cent year-on-year.


10,000 adults

2009: Attempts per

10,000 adults

Year-on-year

change

Woolwich 17.03 23.70 -28%

East Ham 16.07 20.14 -20%

Victoria Street 14.22 12.65 +12%

Lewisham 13.56 16.37 -17%

Cheapside 10.57 9.84 +7%

Reading 9.87 3.30 +199%

Ilord 9.68 9.85 -2%

Tooting 9.41 7.05 +33%

High Wycombe 9.36 6.10 +53%

Stratord 9.08 10.75 -16%

Figure 9: Top ten identity raud hotspots





10,000 adults

2009: Attempts per

10,000 adults

Year-on-year

change

Greater London 7.20 7.92 -9%

South East 3.02 3.39 -11%

West Midlands 1.66 1.72 -3%

North West 1.47 1.96 -25%

East Midlands 1.39 1.45 -4%

Yorkshire & Humber 1.36 1.56 -13%

Scotland 1.13 1.27 -11%

South West 1.12 1.38 -19%

Wales 0.90 0.88 +3%

East Anglia 0.89 1.17 -24%

North 0.87 0.94 -7%

Northern Ireland 0.52 0.58 -10%

Figure 10: Identity raud rates by region


Figure 11: Identity raud map o the UK 2010




6. Fighting fraud in a multi-channel world

The criminally-minded seek to stealthily siphon ever more millions o pounds

rom inancial institutions and other organisations.

They preer to do it quickly, quietly and choose not to discriminate. While

this report has ocused on the impact o raud on large inancial service and

insurance providers, it should be noted that it doesnt matter how big or small

the company is or what the industry is, raudsters are out to ind an underhand

way into corporate inances and make o with the money.

As customer numbers and orders rise, particularly online where increasing

numbers o companies will only ever interact with their customers via the

internet, never has the need to conirm genuine identity been more pressing.

Failure to properly identiy raud in a business can also lead to a compliance

mineield; clear inability to protect customers is a swit way to incur regulatorywrath.

The corollary is clear: organisations that keep a tight lid on raudsters will

keep a tighter grip on their bottom line. But meeting this challenge is not easy

identiying raud, monitoring it and then curbing its impact on business is a

ull-time endeavour.

As a critical starting point, there are three key elements o raud that client

companies need to ensure they can manage: identity validation; its veriication;

and the actual raud itsel.

The irst covers the critical essence o raud: is this person or entity orexample, a related application, bank account or telephone number genuine

and do they actually exist? Secondly, is a given or speciic piece o inormation

applicable to the relevant individual?

Third, on the overall raud, how conidently can a company rely upon every last

scrap o inormation that it has at its disposal?

It is perilously easy to be swamped by an overload o such data that, without

installing eicient anti-raud systems, continues to leave you exposed,

regardless your industry sector.

Within banking, the crucial aspect o identity veriication is compliance across

the whole gamut o multi-channel deliveries: the internet, telephone services,

branches, as well as or bad debt management and customer acquisitions.

In the public sector, its salience is a dierent story here success stems

rom stymieing mass beneit raud and working towards a valuable shared

intelligence between local authority and government departments.

At one end, or example, it can check the veracity o an alleged single person

claiming a council tax discount or living alone and at the other, veriy passport

details and authenticity vital in the battle to prevent terrorism.



Separately, telecoms and utility companies need anti-raud techniques to

hedge against the loss o expensive items such as expensive smartphones or

laptops that are oten given out upront to customers.

And in the burgeoning online gaming industry, identity veriication is essentialor compliance with strict rules on age; when the customer cant be physically

seen, its imperative to ensure they meet age requirements while at the same

time making sure such rules dont act as a commercial deterrent to genuine

customers.

Yet these basic essential ground strokes against raud are only the beginning:

using identity veriication with customers, particularly online as part o raud

prevention, can bring a welter o other beneits.

Conirming proo o identity is an oten tortuous task or customers during an

application or goods or services.

In all too many cases, a poor customer experience can cause rustrationand ultimately lead to lost business, as an individual loses patience with a

cumbersome and time-consuming identity check and abandons the process.

However, eicient identity veriication is able to turn this into a swit and

comparably painless task that critically prevents consumers rom losing heart,

and leads to greater volume o customer acquisitions.

It can also vastly boost online operational eicacy, with speedy set up o

customer payment systems allowing aster low o unds into the business, and

permit more painless regulatory compliance.

This has been underlined by Experians own recent experiences with identityveriication and raud prevention across a range o blue-chip clients and

industry sectors.

In banking, a promotion run by one UK building society to boost applications to

savings accounts tempted plenty o interest but only one in ten o those lured to

the site were being converted into customers.

However, ater the introduction o a new online identity veriication process that

did away with much o the laborious raud testing, the number o conversions

rose to 40 per cent as time taken to pass through the identity checks ell to just

eight minutes.

A similar solution at a large high-street retailer helped to dramatically improve

its online purchase success rate. By deploying a series o out-o-wallet

identity veriication questions that made use o inormation that only the

genuine individual would know, the ormer hurdles o documentation requests

were made redundant upping successul conversion rate.

It can also transorm client companies operational eiciency; reducing the cost

o sta time spent rectiying basic mistakes.



Customers setting up payments with a banking group were running into an

administrative quicksand when either they or sta were keying in the wrong

inormation and sparking a huge rise in account reerrals. Ater a switch to a

new payment validation procedure, the number o reerrals dropped by nearly a

third.

And committing resources to the ight against raud can also be hugely

beneicial i youre a new entrant to a market. Fraudsters oten believe resh

aces to a particular industry segment are more vulnerable to attack than

existing players because they wont be as vigilant as others.

However, Experian has provided a relative newcomer to the UKs retail banking

sector with a panoply o identity veriication products that allow the client to

ensure raud is kept to a minimum as it rolls out new inancial deals in a bid to

capture hundreds o thousands o new customers.


20/20

Landmark House

Experian Way

NG2 Business Park

Nottingham

NG80 1ZZ

United Kingdom

www.experian.co.uk

Experian Limited 2011.

The word EXPERIAN andthe graphical device are trade

marks o Experian and/or itsassociated companies and

may be registered in the EU,USA and other countries. The

graphical device is a registered

Documents

Experian Fraud Report April 2011