Market conditions pose major fraud risk

People taking out insurance products or looking to acquire credit facilities have been found to be flouting the law by submitting false information on their applications in the hope that they will not be turned away.

Indeed with lenders and product providers becoming far more risk-averse, the amount of people looking to lie in order to obtain financial products is growing.

Looking at historic fraud cases filed on their database, national fraud prevention service CIFAS found that a comparison between 2004 and 2007 revealed a 24 per cent increase in dodgy applications.

In each of these instances, an individual had knowingly lied on their application form, or supplied false or altered documentation to support their application.

However most worryingly, more fraudulent applications are being successfully passed today than in 2004. One in every ten false applications were being passed then, whereas the figure had risen to one in five in 2007. This equates to 14,500 cases where the fraudster was successful.

Most frequently, applicants lie to cover up their poor credit history or about the length of time they have lived at a particular address, and the documents falsified tend to be passports, utility bills and bank statements.

Men are more likely to commit application fraud with a ratio of roughly 2:1 and CIFAS found that they will typically do so for asset finance, especially cars. Women are more likely to lie when applying for cards and phone contracts. Most fraud is now committed by men and women in their late thirties.

CIFAS chief executive, Peter Hurst, advised: "This research shows very clearly that all organisations need to be vigilant when looking at applications. The increased use of false documents means that front-line staff must be trained to spot them. This training should not be confined to identity documents like passports, where guidance in how to spot fraudulent ones is readily available. It should also concentrate on other documents such as utility bills and bank statements."