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Brits alter bank statements to inflate income for mortgages

Paloma Kubiak
Written By:
Paloma Kubiak

False application fraud is on the rise, with households warned of the serious consequences in submitting false information to secure mortgages, loans and other goods and services.

Fraud continues to soar as the cost-of-living pushes households to “breaking point”, according to fraud prevention service Cifas.

It reported there were over 309,000 cases of fraud in the first nine months of 2022, representing a 17% increase on last year. This is also an 11% increase on pre-pandemic levels.

It said the rise has been fuelled by a spike in false application and identity fraud, up 45% and 34% respectively.

False application fraud is where someone provides false documents or information when applying for a product or service.

Cifas said this type of fraud has surged as people alter bank statements or fake tax returns in order to inflate their incomes for mortgages, loans, as well as other goods and services.

It warned this has serious consequences, and can mean individuals overextend themselves, default or get into an unaffordable debt spiral. Further, anyone found out could be added to the National Fraud Database, “which can severely impact the ability to take out a future loan or mortgage”, Cifas explained.

Employee theft on the rise

It added that financial pressures may have led some employees to “supplement their income” by fraudulently overclaiming overtime or expenses claims, supported with false documents. Examples include cancelling hotel bookings and asking for the refunds to be directed to personal accounts or submitting false payment dispute claims.

Elsewhere, Cifas revealed a 48% increase in people unsuccessfully trying to deceive potential employers by concealing adverse credit and employment histories to gain access to organisations and businesses.

This year has also seen an uptick in theft of company equipment, with devices such as laptops or phones not being returned by departing staff and, in some cases, sold via online marketplaces.

Identity theft on the up

On the flip side, Cifas figures revealed more people have fallen victim to identity fraud – up 23% compared to pre-pandemic levels.

Cifas said criminals tend to target those with longer credit histories since they can illustrate repayment behaviour over time, and because they’re considered more credit-worthy.

But phishing and smishing scams are on the rise via fake energy discounts or cost-of-living payments, to fake tax rebates and delivery scams as criminals “are now seeking to widen their net”.

These scams harvest personal and financial information via social media posts offering people help with their finances and advising them to access their credit files, all so that criminals can identify their victim’s credit profile.

Facility takeover – where a fraudster gains access to the accounts of innocent victims – now accounts for 8% of fraud cases, with a significant increase in criminals targeting debit and credit cards, or requesting and stealing phone upgrades under an existing customer’s name.

‘A grim outlook for finances’

Cifas said misuse of bank accounts “remains a key concern”, with 68% of cases having intelligence that indicate mule activity, mostly for those between the ages of 21 and 30.

Social media platforms including LinkedIn are being abused to offer scam work from home opportunities, targeting those in financial difficulty, particularly single parents.

As the festive season approaches, including Black Friday and Cyber Monday, Cifas urges shoppers to “exercise caution” before sharing their personal and financial information.

Given all the data, Cifas said it “heralds a grim outlook for finances in the upcoming year”, adding that the UK could be heading into 2023 with unprecedented levels of fraud.

‘Financial tightrope’

Mike Haley, CEO of Cifas, said: “As the cost-of-living crisis deepens, many households are walking a financial tightrope from month to-month.

“Identity fraud increasingly presents a more serious risk to ordinary people, whilst the distress of criminals gaining access to bank accounts, cards or phone contracts, continues to affect thousands.

“We know that fraudsters will increase their activity to take advantage of shoppers ahead of Black Friday and the festive season, and so now, more than ever, consumers must be vigilant of offers that feel too good to be true and question every time they are asked to provide their personal and financial information.

“Businesses should also tighten up their counter-fraud processes, as the economic downturn corresponds with an increase in staff engaging in fraud.”