New research by Experian has revealed that bank account fraud is at its highest level in more than three years, with fraudulent openings for savings accounts up 170%.
Experian’s analysis, based on the latest data from the National Hunter Fraud Prevention Service, found that the fraud rate for current accounts rose by 13% in the second quarter, compared to the previous quarter and was 24% higher on the same period a year earlier.
The second quarter of 2021 also saw a rise in loan fraud rates, which increased by 40%, its highest reported level in the past three years, and up 63% on the same period in 2020.
First-party fraud related to loans, which is where an individual gives false information or misrepresents their identity to access a product on more favourable terms, also climbed, up 18%.
Eduardo Castro, head of identity and fraud at Experian UK&I, said: “Fraudsters assume opening a savings or current account is a relatively straightforward process and then use them to receive and quickly distribute illegally-obtained funds, as well as giving them access to other financial services offered by the bank or building society they’ve selected.
“Both consumers and businesses need to be made aware of the threat that scams pose. Our analysis serves as a warning that fraud prevention should be a priority for all organisations.”
Castro added that new technologies are helping firms to flag potentially fraudulent activity at the beginning of the application and account opening process, while customers are becoming “increasingly comfortable” using security methods such as physical biometrics and facial recognition, and pin codes sent to mobile devices to verify their identity.
Jim Lewis, managing director of National Hunter, said: “It is encouraging that users of the National Hunter service are continuing to detect and prevent fraud, in the face of more fraudulent activity. Even more so when you consider that many organisations have had to completely change their working practices during the pandemic.
“We are continuing to onboard new members into our data sharing community and it’s more important than ever that we work together to fight fraud.”