Identity fraud

Identity fraud may occur when someone steals personal information, opens credit card accounts in the victim's name without permission, and charges merchandise to those accounts. Conversely, identity fraud does not occur when a credit card is simply stolen. Stealing one’s credit card may be consumer fraud, but is not identity fraud. Identity fraud is a synonym of unlawful identity change. It indicates unlawful activities that use the identity of another person or of a non-existing person as a principal tool for merchandise procurement.

Identity fraud can occur without identity theft, as in the case where the fraudster has been given someone's identity information for other reasons but uses it to commit fraud, or when the person whose identity is being used is colluding with the person committing the fraud.

Stolen identification

Identity fraud is the act of using a stolen identity to obtain goods or services by deception. This usually involves the use of stolen, forged or counterfeit documents such as a passport or driving licence. The term ‘goods or services’ typically includes bank accounts, mortgages, credit cards, retail products, an application for a job or simply dishonest claims for state benefits.

Organized crime

False identities are used, for instance, by organized crime to access goods and services or to participate in money laundering. Importantly a large proportion of identity fraud is linked to people trafficking, money laundering, drug running and terrorism.. Information (from Interpol, the National Fraud Authority (NFA) and UK Fraud Prevention Services (CIFAS) highlights the financial impact of identity fraud but takes no account of the distress caused to the tens of thousands of people and companies that fall prey to this form of largely organised crime.

United Kingdom

In the United Kingdom the following factors are likely to contribute to the exponential growth in identity fraud:

New policies to offer a basic bank account for everyone will increase the work load for account openers in financial institutions so already stretched resources will be stretched even further.

The propensity for fraud during times of financial hardship has always been a challenge for banks and financial institutions because they have to balance the unrelenting need to sell their products with the concurrent need to minimise losses.

The recent dramatic increase in internal fraud within organisations during a recession period s adds considerable concern for the sector.

The dramatic increase in visitors to the UK that is expected to occur during the 2012 Olympics Games in London. Identity fraudsters, particularly those controlled by organised crime networks will not be able to resist the temptation of entering the UK to capitalise on a major criminal opportunity.

The proposed tightening of the ‘points system’ for non-EU citizens applying for working visas in the UK will encourage more non-EU individuals to acquire forged or counterfeit EU passports or UK Entry Clearance visas in order to gain employment.

In the UK, identity fraud rose by 32% in 2009 costing commerce and industry many millions of pounds. The problem is serious and increasing. The future climate in the UK is excellent for increased identity fraud and illegal working. The financial institutions and employment agencies may not be prepared for the onslaught. Minimising the impact of identity fraud is a very complex business and some organisations find they are continually playing ‘catch-up’. Of course, there is a general acceptance that a small percentage of accounts will always go ‘bad’ no matter how vigilant the organisation is and it is often left to bank fraud units or credit card fraud departments to clean up after the crime rather than identity frtaud being the 100% focus of a dedicated identity fraud/theft department with a brief to intercept potential frauds before they are perpetrated.

At a recent World Economic Forum in Davos, Switzerland, the Interpol Secretary General Ronald K. Noble warned that with 11 million stolen or lost passports in circulation, passport fraud is becoming a major global threat. The National Fraud Authority (NFA) recently estimated that all forms of fraud accounts for losses to the UK economy of £30 billion a year and The UK Fraud Prevention Service (CIFAS) stated that identity fraud rose by 32% in 2009 compared with 2008.

CIFAS report that in 2010 there were 89,000 victims of identity fraud in the UK. Identity fraud rates across the UK vary depending upon where you live in the country. Experian ProtectMyId reported that there were 72 ID fraud attempts for every 100,000 London adults in 2010, compared with just 9 in the North and 5 in Northern Ireland

In addition to this, a recent survey of employment agencies revealed a worrying lack of personnel screening during the recruitment process. The recession has led to a major increase in outsourcing and the use of temporary and agency staff by many organisations. The lack of understanding or knowledge in implementing the Government’s Baseline Personal Security Standard procedures frequently results in illegal workers being accepted by recruitment agencies and the organisations ultimately employing them falling foul of the UK Border Agency regulations.

Importantly, even if ‘Right-to-Work’ checks are carried out on persons holding non-EU passports as recommended by the BPSS this will only be scratching the surface of the problem, because approximately 70% of fraudsters use counterfeit or forged EU passports and ID cards.