Identity theft biggest contributor to fraud: Report2 min read . Updated: 13 Feb 2016, 02:55 AM IST
Most cases detected in consumer loans. More than half are due to fraudulent contact information
In India, identity theft accounted for 77% of the fraud cases in the first quarter of 2015. Among financial products, auto loans, mortgage loans and credit cards have seen the largest number of fraud cases from identity theft represented by 85% of the total detected frauds in the same period, according to Fraud Report 2016, by Experian India, a credit information agency.
Falsification of address proof is the most popular behaviour among fraudsters, and hiding of adverse credit is the most common behaviour, especially in the automotive loan category followed by mortgage fraud. In case of mortgage loans, it has been seen that fraudsters have also used false employment status to avail the loan.
The four main categories in which the cases of fraud have been put are: incidences arising from fraudulent contact information; fraudulent organisation; identity theft or fictitious identity; and repeated attempts from already identified individuals.
Loan account fraud is witnessing an increase in incidences arising from fraudulent contact information provided by applicants. In the past year alone, this has risen by 275 basis points and now accounts for around 18% of all detected frauds.
Identity theft and fictitious identity cases continue to contribute around three-fourths of all detected cases. The category has seen a rise from 76% in first quarter of 2014 to 77% as of first quarter 2015. While the period saw an increase in fraudulent contact information and identity theft cases, the category of fraud from repeated attempts among already identified individuals saw a decline from 9.26% to 4.38%. The fall could be due to institutions putting in more processes to check historical fraud profiles.
Home loans: The proportion of detected fraud cases for home loans has increased by about 50%—73 cases per 10,000 applications versus 48 in the first quarter of 2014. Here, too, identity theft accounted for 85% of all mortgage fraud cases. Most of these cases are because applicants give false information regarding income for a loan that they probably cannot afford. The cases of fraudulent contact information, however, has declined from 15% to 11%.
Consumer loans: The number of cases detected increased annually from 219 frauds per 10,000 case to 265 cases in 2015. This type of loan has the highest incidence of fraud. Cases of fraudulent contact information are on the rise, accounting for around 56% of the total detected cases in 2015 versus 16% in 2014. Considering that these loans are mostly applied for over-the-counter at dealerships, cases of fraud tend to be higher.
Credit cards: Fraudulent credit card applications have increased from 65 detected cases per 10,000 to 75 cases in 2015. After consumer loans, cards is the category that is most targeted (unauthorised credit or debit card charges). The number of identity thieves has increased from 81% to 85%.
Personal loans: The number of cases detected has gone up from 51 cases to 58 cases per 10,000. Here, too, identity theft remains the biggest cause. As a proportion of total detected personal loan frauds, it increased to 81% from 74%. Fraudsters continue to attempt giving fake applications and fronting.
Edited excerpts from Fraud Report 2016, by Experian India.