Credit card application fraud hit a five-year high in the last three months of 2021, new Experian insight reveals.
Latest data from the National Fraud Hunter Prevention Service, analysed by Experian, found the detected fraud rate for cards rose by 42% between October and December 2021, when compared to the previous quarter, the highest rate since 2017.
Typically, an increase in fraudulent activity is detected over the festive shopping period, but 2021 proved especially busy for organised fraudsters looking to take advantage of an increase in genuine applications to access credit using stolen or illegally obtained personal details.
Almost three-quarters of cases detected involved the fraudster using the victims’ current address to apply for credit, highlighting the importance of people doing what they can to keep their personal information safe and secure, especially when using online apps and social media.
Existing and emerging fraud trends are likely to continue to grow in 2022. Experian predicts established cold-calling and text scams, and fledging cryptocurrency schemes will become of increasing concern throughout the year.
Eduardo Castro, Managing Director, Identity and Fraud, Experian UK&I, said: “Genuine applications for credit tend to rise as we enter the busy Christmas shopping period, but the extent to which fraudsters tried to take advantage this year is truly eye-opening.
“These figures should serve as a warning as to how important it is that people look after their personal information. We need to be more vigilant online. For example, oversharing personal details on social media platforms is easily done, but the consequences can be dire, with nearly three-quarters of the cases we found using the victim’s current address.
“Meanwhile, businesses need robust fraud prevention systems in place to protect customers and technology is helping in the battle. Identifying fraudulent activity at the point of application frees up time and resource for fraud teams to investigate more complex cases.”
The rise in rates can also be in part attributed to financial services’ fraud teams using a sophisticated combination of technologies, such as fraud probability scores powered by Machine Learning to successfully identify and prevent fraud, without impacting the experience of genuine customers.
This has allowed lenders to automate more of the application process and decline questionable applications rapidly and efficiently, rather than flagging it for manual review.
New forms of authentication are also becoming prevalent. Pin numbers sent to a person’s mobile phone have become typical, while biometrics systems – both physical and behavioural – are becoming more familiar and accepted by consumers too.