Consumer News » Public sector consumer problems

2012 UK Fraud Predictions for 2012

Alan — Thu, 02 Feb 2012 17:47:35 +0000

There are currently such enormous challenges facing those who work in the world of finance that UK Fraud, www.ukfraud.co.uk, the leading fraud consultancy, have listed 10 predictions designed for the the prevention of domestic fraud in 2012. Here are those predictions.

1. The National Fraud Authority, or NFA, will be facing huge political pressure to deliver a new fraud strategy that will actually make a difference. The Government will then demand that the NFA starts to demonstrate measurable annual savings in fraud, and these These are expected to be over £10bn. At the same time there will be a increase in the public tussle for funding through the Government’s latest cyber crime operation.

There will also be increasing pressure on the NFA to adopt a much more global and pan European perspective in order to combat the fraud that is infiltrating the UK from territories overseas.

2. With the volume of traffic for e-commerce transactions increasing, fraudsters will target individual merchants and merchant groups. As a result, there will be:

a. More co-operation across the merchant sector.
b. More disintermediation of the merchant acquirer services.
c. Greater use and development of acquirer anti-fraud enrichment services.
d. Payment Service Providers (PSPs) will become more prevalent, with fraud solutions provided as an integrated part of the service they offer.
e. Greater dissatisfaction with many existing fraud solutions, particularly with those that are less well conceived.

3. The USA has now decided on its strategy for a card Chip standard (i.e. EMV). It will not be adopting PINs as the authentication method as most countries have done in Europe. The USA prefers to rely on an ‘on-line’ strategy for authorisations. So the US decision-makers will take the opportunity in 2012 to relax and unwind until they see the trauma to the system caused initially by the wider adoption of NFC-mobile enabled payments and US customers wanting to pay in Europe when visiting London 2012 Olympics.

4. UK Payments (a.k.a. APACS) will probably applaud a small fall in fraud for the year within the card industry. The change will be as a result of retailers continuing to implement 3D secure solutions (the code and password to finish an on-line transaction) and some bespoke fraud prevention screening solutions. However, this will belie an underlying problem that will ‘strike’ hard next year, with major breaches involving attacks on SDA/DDA, card cloning, and/or PIN compromises and tampered devices.

5. There will be a major shift in the presence, position and fraud service offerings of one or more of the major data-bureaux (such as credit reference agencies) as more solutions either move ‘in-house’ or move to systems developed by a host of new players in various fraud sectors.

6. ID theft will keep growing. We have had a banking crisis, a housing crisis; so are we now ready for an ID crisis as more and more IDs are stolen and used across the world for major frauds? CIFAS keeps us updated on identity thefts, but the problem is now gathering enough momentum to reach a crisis point.

7. One or two UK government departments will see a significant rise in fraud that will cause a major re-think in how fraud is handled; in both the fraud strategy in government and in what should be done about it. This could fall on HMRC with tax evasion (given the threatened recession). This has been a repeat prediction over many years, but something is very likely to crack soon as fraud in the public sector just keeps rising.

8. There will be increased momentum amongst insurers (or within a few key insurers) to develop a strong and credible fraud prevention solution based around the ‘front end’ (underwriting stage of business), maybe with a strong data-sharing drive.

9. With all the pressures on financial cuts, and global hardship; we will inevitably get to hear of the latest sensational fraud surrounding a notable individual (or two). Will it be a CEO or a politician or someone else this time? Will it be around a major insurance company, a Hedge Fund, an Olympic committee member or a Telecom chief?

10. Overall fraud will increase dramatically across the UK and the rest of Europe in 2012. The areas likely to be most affected include: insurance, merchants and retailers, telecoms, government departments and Local Authorities. The most common fraud activities are expected to be increased cybercrime, internal fraud, supply chain and procurement fraud.

Says Bill Trueman, CEO of UK Fraud, “Fraud prevention is in part the art of knowing what will happen in advance so making predictions is a natural part of the process. However, currently there are such enormous challenges in the financial world and also for organisations such as the NFA that we felt it would be useful to show managers in financial services, credit, insurance and the public sector the kind of issues that they might expect to see in 2012. These are only the issues that may ‘tip the scale’ as there is a raft of others that might not make the headlines. Or will they?”

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Personal budgets encouraged by councils

Alan — Thu, 19 Jan 2012 15:06:07 +0000

Councils inEnglandare increasingly seeking to encourage people living within their regions to use “personal budgets” to pay for their own social care costs. Whether the person is elderly, physically or mentally handicapped, the personal budget allows them to choose care provider themselves, while the council merely supplies the funds.

Both central and local government are promoting this move towards giving the English public greater control over the services they use as well as increased choice when it comes to where to get those services from, and it is hoped that in just one year’s time everyone who is due some level of social care from their local council will be paying for it through their own personal budget.

Councils like the scheme as it cuts down on the number of care staff they have to employ while consumers like it as they can shop around not only for the best deal financially, but also the best in terms of service and convenience. It sounds like a win-win situation for all concerned, but as with any new scheme involving public funds there are always those looking to take advantage. Reportedly there were over 100 cases of social care fraud, most involving personal budgets, during 2011.

That figure came from the Audit Commission which was asked to monitor the provision of social care through personal budgets to ensure this kind of thing did not happen. Unfortunately, these 100 cases alone cost the public over £2 million – and those are just the ones who were caught.

Personal budget cash to pay for care services can either be paid to the individual themselves, or if this is not appropriate a family member or appointed carer. There seems to be three main types of fraud relating to the personal budget scheme and each one is listed in some detail in the Audit Commission’s recent report “Protecting the Public Purse”.

The first type is similar to many existing benefit frauds, in that the individual makes a false claim for cash that they are not entitled to. However, the other two ways that the system has been defrauded are particular to this type of scheme; firstly, unscrupulous relatives or friends make the claim on behalf of someone who is unable to take care of themselves and then keep some or all of the money and secondly, organisations which provide the social care services over-charge the individual or council for the help they are providing.

Councils are showing that they are keen to crack down on personal budget frauds, with Croydon Council having the dubious honour of being the first organisation to pursue a successful case in the courts. Croydon resident Sameer Hamidi had kept over £12,000 that he claimed from the council on behalf of his ageing mother, stating that the money was going to pay for care that he was actually providing himself.

A spokesperson for the charity Action on Elder Abuse is concerned by this case and many others, in which evidence has shown that the very people allowed to make claims on behalf of their relatives, their children, are also the ones who are most likely to abuse this privilege.

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Cyber crime grows as we make more use of devices

Alan — Thu, 29 Dec 2011 17:51:14 +0000

Cyber crime has been with us for at least as long as the internet, and it seems to stay at least a half step ahead of the crime-busters. As more and more consumers turn to the net via personal computers and other electronic devices for all sorts of purposes, their personal and financial data becomes a gold mine for an alarming number of clever and unscrupulous hackers.

Data from several independent surveys confirms that online shopping is on the increase; almost half of consumers surveyed indicated that they would be doing part or all of their shopping via the net during the month of December. UK shoppers are expected to spend around 7.7 billion pounds online in this month alone, and the estimate for online spending throughout Europe is over 67.5 billion for the same period.

VASCO Data Security International is a global software company that specializes in authentication products for online accounts, transactions and identities. They have offered a few good tips for online shoppers that should significantly improve their odds of ordering and paying for purchases online without becoming part of the online fraud statistics.

The first suggestion is to make sure you are dealing with a known and reputable site. Read the terms and conditions of the purchase agreement and make a note of the contact information and shipping or other costs. Don’t use public sites for shopping or banking purposes; it’s easier for hackers to access them. If an online or e-mail offering looks too good to be true, it probably is; don’t even click on it or open it.

The same tips apply to consumers using mobile devices such as phones to do their shopping or other transactions. VASCO offers a security solution called DIGIPASS that has applications for both pc’s and mobile devices. DIGIPASS generates strong, one-time or short term passwords that cannot be duplicated or reused, and provide a powerful defence against cyber criminals.

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Young women most vulnerable to credit card fraud

Alan — Thu, 29 Dec 2011 17:47:45 +0000

The National Fraud Authority has published research indicating that women in the 26 to 35 age range are most vulnerable to online credit card fraud, chiefly because only 8% of those surveyed had taken any effective action to protect themselves with anti-virus software.

Leading credit card organizations in the UK have developed services that are designed to help consumers protect themselves from fraud, including the campaign Be Card Smart Online, aimed this year at the group of young women who either don’t know or don’t care about keeping their personal computers and other electronic communications protected against viruses and spyware.

The site offers tips on safe shopping that no one can really afford to ignore. A few of the simplest and most effective precautions that can be taken are outlined, and the campaign is supported by the NFA as a good source of information for anyone shopping or banking online. Though the incidence of credit card fraud has dropped about 40% over the past two years due to greater consumer awareness and initiatives by financial institutions, the data still shows losses of well over 365 million pounds last year.

The first line of defence is protective software; you should make sure it is installed and kept up to date; set your programs so the latest security updates are downloaded automatically. Keep pop-up blockers on and keep the security level on your browser(s) as high as possible without slowing the function down significantly.

When you are shopping, make sure you know who you’re dealing with; one way is by typing in the specific address rather than jumping from links on other websites. Also, look for the padlock symbol, especially on an unfamiliar website; it’s a good indication that the retailer is reputable.

There are a great many things you can do to reduce the odds of becoming a victim of fraud. These and many more good tips are currently available at www.becardsmart.org.uk and at various shopping websites, so be smart and take advantage of all this free information.

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MP Nick Herbert pushes the virtues of Crimestoppers

Alan — Sat, 19 Nov 2011 11:25:11 +0000

MP Nick Herbert pushes the virtues of Crimestoppers

There were almost 300 attendees present at the national seminar held recently which is aimed at stopping rural crime. The event was hosted by ACPO, the Association of chief police Officers and Crimestoppers, the crime stopping charity.

The event was held on the 10^th of November at Kettering Conference Centre and was called ‘Closing the Gate on Criminality’. It was the largest rural crime seminar ever held in the UK and was attended by both national organisations and members of various rural communities. The key speaker was the minister of state for policing and criminal justice, the Rt. Hon Nick Herbert MP.

Dave Cording is the deputy CE of Crimestoppers and he has said that they were delighted with the turnout and that it had also been good to have Nick Herbert delivering a key speech as it showed how vital this issue was nationally, and it was good to hear him describe the role Crimestoppers played as immensely important.

“A key point made was that agricultural equipment such as tractors costing up to £150,000 is being stolen, sometimes by organised criminals who can get it out of the country within 24 hours – and may leave the rightful owners unable to carry on their day-to-day work without it. This strengthens our determination to “close the gate” on criminality in rural areas.

“The seminar covered many essential topics, including using new technology such as texting and social media to share vital information to fight rural crime. We also discussed the need for community involvement, and sharing of information and intelligence.”

Rural crime can include theft of farm machinery and equipment, oil, diesel, batteries, metal for scrap value, tools, quad bikes, agricultural chemicals, tractors, and livestock such as sheep. An estimated £50 million to £70 million worth of plant and agricultural machinery is stolen nationally every year, and only 5% of this stolen property is ever recovered.

Dave Cording added: “We understand that rural communities are close-knit and trust is an important part of rural life, so people may be aware of who are committing these crimes, perhaps a neighbour or work colleague, but don’t feel comfortable giving this information directly to the police. This is where Crimestoppers can help, by providing an anonymous service for people to pass on information about crimes.

“We were also very pleased to work with Woldmarsh, our supporters in Lincolnshire, at the seminar – as we are with all organisations with strong Corporate Social Responsibility (CSR).”Seminar exhibitor Jo Quelch, Woldmarsh Marketing Manager, said: “We were delighted to show our support, and also with the amount of interest we received as the only Agricultural Buying group attending.

“The seminar was a great opportunity for all of us to spread awareness as communities, partners, businesses and manufacturers. We hope it was the beginning of many more equally successful events, as Woldmarsh continues to help empower communities to give information on this vital area of “closing the gate” on rural criminality.”

More information on the seminar is also available at: www.acporuralcrime.org

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Energy-saving scams are rife

Alan — Thu, 10 Nov 2011 16:55:37 +0000

Energy-saving scams are becoming more prevalent in the UK and people are being urged to be extra vigilant against them. Pembrokeshire county council has issued a warning after many residents have complained about phone calls attempting to sell them a machine that will save them electricity. The callers claim the device will cut energy costs by 40% and it only costs £100.

Nigel Watts is a trading standards manager and he is said there is no evidence that these machines will work in the UK. He commented, “There is a high chance that these devices will not be delivered or if they are that they will not perform as promised. As most of the sellers seem to be from overseas it is highly unlikely that people will be able to get their money back.

“We are urging consumers to be very careful about giving out their card details over the phone. Even if the person knows your name do not give out further personal information or banking information until you have confirmed their identity. Some callers may claim legitimacy by giving you a UK number, much of the time though this number is fake.” Contact Consumer Direct Wales if you receive any suspicious phone calls.

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Even power company staff are confused by their own tariffs

Alan — Thu, 03 Nov 2011 02:09:47 +0000

An undercover investigation has shown that many staff who work at energy companies do not know which their cheapest energy is offering. This is because of the complexity in a number of options available to consumers. The information has come out of the consumer body Which? after an investigation that involved calling several energy companies to get advice on which was the suppliers best deal.

The consumer group phoned up the energy providers and asked them which was their lowest cost option. One in three of the firms questioned did not offer the cheapest deal and gave advice which was not entirely accurate. The six largest energy providers in the UK have a huge number of different tariffs available – somewhere around 400. There are also a great many complexities offered with each of the tariffs such as cashback and bill free months.

Of all the companies investigated EDF energy and Southern Electric performed the worst. ScottishPower were the most helpful and told the caller the cheapest rate the majority of the time, however, they failed to mention that they have an exit fee of over £50.

Richard Lloyd who is a representative from Which? has commented, “During our investigation we found that the information staff gave was confusing, if not simply wrong. When a consumer phones an energy company they should be given the information they ask for, in this case the cheapest rate.

“For too many energy companies this information was simply not provided. With the increasing cost of fuel it is even more important that energy companies are clear with customers about the different pricing options.” Chris Huhne is the energy minister and he has recently held meetings with regulators and suppliers to try and find ways for customers to save money on their energy bills.

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Consumers worry that mobile wallets are not safe from phone hackers

Alan — Mon, 17 Oct 2011 09:23:51 +0000

Intersperience research reveals mobile payment security concerns

· phone hacking fears prevalent among consumers

· 44% worry about lack of security software on mobiles

· only 17% of consumers want to use mobiles as wallets in future

While new payment systems known as ‘mobile wallets’ seem very much to be the way in which we will be paying for our goods in the future, but Intersperience have discovered in their latest research that there are still major security concerns. The big worry is phone hacking, and until this these fears are allayed it is unlikely that this swipe and pay system via a smartphone will be widely adopted across the UK.

The research specialists in international consumerism questioned adults across the country about how they felt regarding using their smartphones to pay for goods via the mobile payment systems, and only 17% expressed an interest in using their phone as a wallet. The top concern for consumers was the lack of security regarding the software, and 44% cited this as their main worry.

The project from Intersperience, known as Digital Selves, asked for the views of over 1000 consumers in the UK, and these results coincide with the US trial of the new mobile electronic ‘Google Wallet’ system from the search engine giant. The anticipated launch for this new system in the UK 2012, but as it stands there isn’t a great deal of interest in it, according to this survey.

It also revealed a wide mix of both rational and emotional opinions on the security of mobile payment, as 24% said that using a mobile phone to purchase goods felt less safe that other methods, but they didn’t know why this was. A further 24% also believe that they are more likely to have their smartphone than their wallet stolen.

It also showed that many consumers feel vulnerable following high profile phone hacking scandals. One respondent said: “After the recent phone hacking scandals it’s clear that mobiles can be hacked. I’d be worried criminals would learn to do it.”

Paul Hudson, CEO of Intersperience said: “There is no doubt that the phone hacking scandals have unnerved consumers. We also detected a marked rise in security concerns when people use devices with mobile internet access compared to fixed access via PCs. These beliefs will impact the pace at which UK consumers adopt mobile payment systems.”

The research showed that just 8% of adults currently use their mobile phone for payment although this is expected to increase as 21% said they would like to use their phone to buy something in future.

Digital Selves also looked at consumers’ willingness to use PCs and mobiles to pay for goods or services ordered online. It found that while 11% of people would hesitate to make a purchase via PC, this more than trebled to 37% when it came to the proportion who would hesitate to buy via a mobile phone.

Hudson commented: “There is a common but not necessarily logical perception that as your internet link becomes ‘untethered’ your information is automatically less secure. The belief stems from the context of mobile usage which is generally when you are on the move in public places, although in reality there are far higher instances of security breaches over PCs than mobiles.”

The younger generation emerged as the keenest future fans of mobile commerce as one in three (33%) said they would like to use their mobiles to buy in future. Under 18s are also keener on mobile wallets or payment systems, with 25% happy to use one instead of a traditional payment method.

Hudson said: “Today’s adults may be adopting a cautious stance on mobile payments but we expect the next generation to be more enthusiastic. Digital Natives will be in the vanguard of mobile commerce.”

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Police tackle voucher shopping fraud

Alan — Wed, 05 Oct 2011 04:55:41 +0000

Stores and supermarkets across the UK have been having to go to the police to deal with frauds that have been occurring in their stores. The economic climate has meant that more stores than ever are issuing money off codes so that people are tempted to spend more in store. This has lead to people making forgeries of the vouchers so that they can use them many times. Modern computer and printing technology has made this relatively easy.

The police announced that they cautioned a woman who had been using copies of the same voucher several times in the store. This entitled her to a significant amount of discount on her shopping. The use of self checkouts in the supermarkets has also lead to increased voucher fraud as staff are not present to check the vouchers validity.

Tesco have had the first prosecution completed for voucher fraud when a couple where found to be reusing the same voucher over and over again that entitled them to nearly £20 of each shopping trip. They were using the self checkout and when asked to hand in the voucher, they simply kept it. In the end it was found that they had received over £1,000 in free groceries.

It is estimated that the figure for voucher fraud per year is £300,000 and this has been increasing and speculation is that this is because people are facing harder economic times. One case has seen a large company loose over £80,000 internationally when it found that despite only issuing 8,000 coupons, they had claims of 50,000 usages.

Annie Smith of the Institute of Sales promotion has said, “It has become such a problem that some companies are considering stopping vouchers altogether. If people abuse the system all consumers are going to suffer in a time that vouchers are needed more than ever.”

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OFT cracks down on companies that sell free government services

Alan — Thu, 25 Aug 2011 07:05:47 +0000

In times when the consumer has less disposable income the last thing they need is to be paying for services that they should be entitled to for free. The Office of Fair Trading (OFT), is beginning a crack down on companies that are selling the same services that the government and other bodies provide for free.

A common theme among these companies is to start a website that looks governmental but is not and charges the visitor for a service they can get for free from the real website. Often these website will use a ‘.org’ address to make themselves look official. The activity is widely spread despite the OFT having the power to close such websites.

An example of this activity is the European Health Insurance Card (EHIC), searching on Google will give several results of websites that will charge you for the card. The card can actually be obtained free from the NHS. One website states that they charge £15, as a fee for processing the application, the website does state however, that the card can be obtained from the NHS at no cost.

These business practices are called misleading and unfair and actions can be taken against them in both the criminal and civil courts. Cavendish Elithorn of the OFT’s consumer group as said, “these websites must make clear that the same service can be gained from the government for no cost. They must not trick people into thinking there is always a charge. The investigation will examine whether these sites are misleading consumers.”

This is not a new problem for the OFT. Last year it received several complaints from bodies such as the DVLA, saying that the websites charging people over the odds looked very similar to the websites run by the official bodies.

People who have been taken in by these websites have complained, “it’s outrageous, they are committing fraud and taking advantage of people.” So far three website have been deemed by the OFT to have violated trading regulations, since then they have agreed to make it more clear on their websites that the service can be got for free elsewhere.

Consumer Focus Investigations has said, “The OFT must take further action to ensure that consumers cannot be taken advantage off in this way. We urge consumers to be extra vigilant when buying services online.” The Citizens Advice bureau has also criticised the practice.

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