Criminal financial activity is on the rise with loan fraud rates at their highest level in more than three years according to new data.
According to Experian, which analysed data from the National Hunter Fraud Prevention Service, fraud rates are experiencing an “alarming surge.” Loan fraud, the practice of falsifying information on application forms, has reached its highest level in three years and is up 40 per cent in Q2 of 2021.
The data also found that fraud linked to current accounts was also up by 18 per cent compared to the previous quarter and was up 24 per cent on the same period last year.
Meanwhile, the number of people who opened savings accounts for the purposes of committing fraud, rose by 170 per cent – three times higher than the previous quarter and five times higher than in Q2 2020.
Eduardo Castro, Head of Identity and Fraud Experian, urged customers and businesses to make fraud prevention a “priority.” He said: “both consumers and businesses need to be made aware of the threat that scams pose.
“Fraudsters assume opening a savings or current account is a relatively straight-forward process and then use them to receive and quickly distribute illegally-obtained funds, as well as giving them access to other financial services,” Castro added.
Experian suggested that the rise in rates could partially be attributed to financial services’ fraud teams using a sophisticated combination of new technologies to detect and prevent crimes.
Increasingly, lenders use machine learning to assess an individual’s suitability for a loan rather than taking information on application forms at face value.