Credit card fraud rate jumps to five-year high

The credit reporting agency’s research points to this being the highest rate of fraud since 2017. And while fraudulent activity typically increases over the festive shopping period, 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 details. 

Of the fraud cases detected, almost three-quarters involved the fraudster using the victims’ current address to apply. This - according to Experian - highlights the importance of people doing what they can to keep their personal information safe and secure, especially when using online apps and social media. 

The firm also believes existing and emerging fraud trends are likely to continue to grow in 2022, predicting that established cold-calling and text, and fledgling cryptocurrency schemes will become an increasing concern throughout the year. 

Commenting on the research, Experian UK and Ireland’s managing director of identity and fraud Eduardo Castro, 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.”

Experian’s researchers also said the rise in rates could be partly 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. 

This has, in turn, allowed lenders to automate more of the application process and decline questionable applications rapidly and efficiently, rather than flagging it for manual review. 

Alongside this, new forms of authentication are becoming prevalent. Pin numbers being sent to a person’s mobile phone have become typical, while biometrics systems are becoming more familiar and accepted by consumers.