The author

Ben Archer

Lead Consultant

View profile
News & Views / Diving Into The Fraudscape: Insights from CIFAS
22 May 2024

Diving Into The Fraudscape: Insights from CIFAS

CIFAS’ ‘Fraudscape’ report of 2024 sheds light on the persistent and evolving threats facing the fraud prevention community. Today, we’ll unpack some of their key insights – exploring how leveraging education, advanced technologies and collaborative efforts across industries and government bodies can bolster prevention initiatives.

Read the full report here:

1. Identity, Impersonation, and Synthetic ID Fraud

Despite strides in reducing identity fraud, it remains a threat - making up a staggering 64% of filings in 2023. Even as cases dip, the surge in bank account fraud (up 12%), particularly targeting personal current accounts, sends alarm bells ringing across the industry.

Impersonation, especially involving current addresses, accounts for 77% of filing reasons, with most victims being over the age of 61.

Synthetic ID fraud, representing a sophisticated tactic where fraudsters fabricate identities using compromised details, is continuing to cause concern across the industry, with CIFAS commenting “many organisations are concerned about the potential growth in AI generated fraud, enabling sophisticated phishing scams and synthetic identities.”

A major challenge with these fraudulent activities is that they can often pass checks for additional facilities with little suspicion, causing large losses to occur, masked as bad debt, with no chance of debt recovery.

It is clear that whilst we have fortified defences against fraud, a key challenge continues—the vulnerability posed by individual customer actions, including those that put them at risk of identity, impersonation and synthetic ID fraud. Instances where unwitting customers fall victim to scams or unknowingly disclose sensitive information remain beyond the control of lenders.

The path forward must involve a blend of heightened awareness initiatives, improved warning systems, and education to mitigate these risks. By integrating cutting-edge technology, expert fraud consultation, and proactive customer education, organisations can create a seamless customer journey where fraud risk is low, can focus on protective friction only in the areas where it is required.

2. False Applications

In 2023, application fraud saw a decline of 17%. This decrease was a particular success in the banking sector, which experienced an impressive drop of 31%.

Yet, as banks make headway, other industries are feeling the pressure – with an increase in cases across loans (+25%), insurance (+20%), and telecommunications (+17%).

These sectors are now at a crucial juncture where adopting advanced AI and ML technologies, much like those used in banking and fintech, is no longer optional, but is essential in the fight against fraud.

The use of advanced AI/ML techniques for fraud prevention models create dramatically stronger results than traditional approaches. These techniques capture complex patterns within the data, detecting and preventing fraudulent applications whilst minimising false positives, allowing for improved customer interactions and trust.

Jaywing’s award-winning fraud prevention software, Archetype, is particularly powerful in the fight against fraud as it offers full transparency and explainability – meaning you don’t just know what the model has flagged as potentially fraudulent, but you also know why.

As these impacted sectors continuously learn from the banking industry’s experiences in fighting fraud, embracing and adopting these technological solutions, which have proven their worth in dramatically reducing fraud rates, will be key.

3. Collaboration Across Industries

All industries can and should do more to prevent fraud. In an increasingly connected world, the avenues for fraudulent activities have increased exponentially, and prevention methods need to keep up.

CIFAS stresses this by stating that action should be taken in the below areas, ensuring efforts are joined up across government, law enforcement, and telecommunications:

  • “Provide cross-government leadership in the response to fraud”
  • “Modernise the criminal justice response to fraud”
  • “Ensure social media and online platforms are included in the multi-sector response to fraud”

Beyond individual organisational responses, a concerted effort is imperative. Robust cybersecurity measures, coupled with comprehensive training and education programmes, should form the UK’s frontline defence against the growing threat.

In a rapidly evolving landscape, companies must continuously monitor and adapt their fraud prevention strategies to stay ahead. By keeping a vigilant eye on security controls and fraud patterns within their organisations, they can ensure that their defences not only meet current needs but are also agile enough to adapt as threats and fraudster techniques evolve.

Learn where your fraud weaknesses lie.

Request Jaywing’s Fraud Health Check.