UK consumers warned of increase in credit card application fraud

The last three months have seen a sharp increase in fraudsters applying for credit cards using the stolen personal details of consumers, according to analysis from financial information provider Experian.

Consumers have been warned to secure their personal data in the lead-up to Christmas as Experian’s analysis of Hunter Fraud Prevention Service data between August and October revealed a 43% increase in the number of fraudulent credit card applications.

“The UK is experiencing a severe wave of fraud, which shows no signs of abating and it is highly likely, as many of us head online to do Christmas shopping, that the trend will be even more pronounced over the next month,” said Eduardo Castro, head of identity and fraud at Experian UK.

Castro said there are risks for businesses as well as consumers, facing the challenge of balancing the ease of making purchases with security.

“With such a volume of digital transactions being carried out, it is critical that organisations can confirm their customers’ information is legitimate with as little friction as possible, while consumers should do all they can to protect their information online,” he said.

Experian said businesses are using sophisticated new technologies and anti-fraud teams are becoming more successful, which partly explains the rise in fraud rates seen in the analysis.

But it warned customers to be aware of how they can best protect their personal details and information when shopping online.

The Covid-19 pandemic and the lockdowns it caused have driven more and more consumers online, which has increased the opportunity for criminals to steal personal information that can then be used to make what appear to be legitimate purchases.

For example, authorised push payment (APP) fraud, which occurs when fraudsters use the stolen banking credentials of consumers to make payments, is also on the rise.

According to banking trade body UK Finance, there was a 71% increase in APP fraud in the first six months of this year, reaching £355m. During the same period, payment card fraud dropped by 9% to £262m.

The amount of money lost to fraudsters in the UK over that period totalled £754m, a rise of 30% from the equivalent period last year, and UK Finance described it as being at a level where it poses a national security threat.