Leading fraud and risk management consultancy UKFraud (www.ukfraud.co.uk) has drawn up a list of predictions for the coming year. Their fraud predictions for 2014 are::
1. The Cabinet Office : The Cabinet Office's Fraud Error Debt Department will evolve quickly in 2014. With the recent demise of the National Fraud Authority, which started out in 2005 with credible strategic targets that were eroded over the years, the FED's task-force will have to work hard to deliver both a strategy and results. To succeed in 2014, they will have to focus on setting and delivering against aggressive targets and on developing a clear strategy in all areas where fraud is found. This will see them setting the agenda for action in emerging risk arenas. The focus now will hopefully be upon prevention more than detection and on detection more than investigation and management. To do this effectively in 2014 they will now feel the need to work with more fraud and risk strategists tilting the balance away from just civil servants and ex-policemen/investigators. If this happens, then there is a chance that real progress could be achieved both in the public and private sectors.
2. M-Commerce Payments – Start-Up Failures: There have been so many start-ups, new joint ventures and new products in the mobile commerce and mobile payments market in 2013. Many of them have been created on the back of poor infrastructures. Accordingly, many of these will fail when fraudsters attack them and they will lose $£€ millions because of inadequate IT security, poor infrastructures and often a lack of effective authentication and thinking. Many such'time bomb' companies are backed by major organisations and venture groups who have rushed-in without proper or in-depth due diligence! Another minor dot.com bubble is potentially on the way….. Maybe it will be a mob-com bubble this time?
3. European Payments Council (EPC) Will set the Standards for Mobile Payments & Mobile Wallets. : With the meteoric growth of m-commerce and in particular mobile payments and wallets, someone, somewhere needs to set regulations, best-practice and governance. The European Payment Council is working extremely hard to take a lead and as it is early days, needs help and encouragement. Whilst they are at the consultation stage, they do seem to understand the market issues; so 2014 should see them start to develop direction and strategy. If they do not, then by the end of the year, the chances are that others will have to take a lead – such as the UK Payments Council, the UK government or other bodies. However, there is little clear leadership in the UK on this direction at the moment. This may be accelerated by mobile payment company failures – see 2 above.
4. Police Investigate Fewer Fraud Cases : which will hit the media as a new scandal, when we learn that a great deal more 'lower level' fraud will occur, such as elderly folk being increasingly scammed out of life savings – This includes the 'phone lines are left open for dummy calls to be made to fraudsters acting as bank staff' scam. Such cases, and may others are often reported to Action Fraud, so it will be interesting to see what percentage of those reported are subsequently passed to and investigated by police and whether this increases or decreases over 2014.
5. Data-Sharing Will Increase: At last, in 2014 we will learn of the emergence of new data-sharing initiatives, but it is felt by some that these will miss out most of the benefits called for in the original 2005 plans set out by the outgoing NFA. Private sector involvement will potentially be downgraded because of a fear of commercial exploitation etc. and with the demise of the NFA, there is a chance, some believe, that elements of the public sector may even consider going-it-alone in 2014.
6. Mobile device authentication will grow: It is time for this technology – i.e. the technology responsible for the authenticating (i.e. 'fingerprinting') of IT and mobile based devices to improve 'event' authentication. Growth in 2014 will come from many existing sectors, as well as new sectors building the technologies into their evolving products to add new layers of checking. 'Early adopter' and 'innovator' customers will start to use this to validate user's technology at the core of their financial product offerings. This will kick start a whole new IT and mobile product development lifecycle.
7. The USA will finally adopt EMV as a card payment standard AND with PIN as the CVM: This has been gradually evolving but it will most likely start to happen in 2014. Many pundits believe that issuers in the US are increasingly less powerful in the card schemes and that the issuing businesses are becoming more commoditised. The drivers will evolve faster as the decision-makers in the USA start to find the business-case more compelling, the losses growing rapidly, and with a need to listen to acquirers and merchants more; to whom the power-base is moving.
8. Card Fraud – will see a rise in losses: As the economy picks up and as a gap opens between 'the haves' and the 'have-nots' if there is indeed a 'cost of living crisis'. The levels of card fraud today are such that there is a degree of industry complacency that will allow fraud to grow again. It will also grow because of the many new products being introduced to the market in the M-Commerce space which will suffer from major vulnerabilities, and bring many new types of losses especially for the new m-merchants.
9. Mortgage Fraud : It will continue to be flushed out with a few new stories of failures where businesses have entered the market without proper foundations of fraud and credit controls.
10. Public Sector fraud : Given that we have seen a supposed doubling of fraud each year for 5 years (according to NFA figures), so will we probably see a desire to clarify what the real levels are rather than relying upon solely these estimates. The pressures of delays in introducing Universal Credit could well divert Civil Service efforts away from making decisions and doing anything substantive about frauds in 2014.
As Bill Trueman CEO of UKFraud says, "Every year it gets harder to predict the trends for the coming year as the government continues to chop and change its various approaches to fraud, rather than addressing the issues and planning for the future – where there is so much happening. Sadly, as a result, fraudsters can feel quite optimistic about 2014 as without clear plans strategies and direction to deter or to defeat them, many now believe that the UK has become an attractive and welcoming place for their activities. This will be the case, unless of course there is a wholesale change in culture and to the current approach. We are all victims as we all (except the fraudsters) pay taxes, pay for banking products and for insurance services, and we even get attacked directly too. With up to £1,000 fraud a year against every person in the UK for fraud, we have to 'take the gloves off' and take much more radical action as soon as possible."
About UKFraud (www.ukfraud.co.uk)
UKFraud is a leading UK based consultancy, with an impressive international track record of eliminating the risk of fraud. Its founder Bill Trueman is widely accepted as one of Europe's leading fraud experts and a frequent commentator and writer on the issues involved. Trueman has extensive experience of the banking, insurance and the financial services sectors and is a thought leader at the forefront of many industry wide and international debates.
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