Towards the end of 2020, data from the Association of British Insurers (ABI) revealed that every five minutes a fraudulent insurance claim is uncovered, with 107,000 such claims (worth around £1.2 billion) uncovered by insurers in 2019. The sheer scale of this problem and its impact on the same consumers who are already facing financial constraints due to COVID-19 makes the fight against insurance fraud one all insurance businesses must take up in 2021.
To truly take up arms against fraud means generating an accurate picture of the environment in which fraudsters operate, said Peter Hazlewood (pictured), the group financial crime risk director at Aviva, which is why intelligence management and collaboration plays a critical part in this ever-evolving struggle.
Another key piece of the puzzle is in the hands of those who have managed to prevent a fraudulent act from occurring, he said. Often, having evaded fraud, people decide not to tell anyone about what almost occurred as the threat has passed, but he would encourage them to contact their providers and give them as much information as possible. This allows their provider to connect this information with that provided by other consumers or companies.
“There is a mechanism to share this fraud intelligence with other providers,” he said, “and then work collaboratively with the authorities to provide them with a joined-up picture that massively enhances the ability of the authorities to actually bring about arrests and prosecutions. It’s a giant jigsaw puzzle with many different participants, and Aviva, other providers and the police hold some – but the customers have all the rest, and we need you to give us those pieces so we can provide the authorities with as big a picture as possible.
“From dates, to names, to telephone numbers, to email addresses, to documents - any information that can be provided on scammers is valuable and helps build a richer intelligence picture. In lots of cases the criminals are operating overseas, but amassing data allows law enforcement agencies to cooperate with one another cross border as well, as they recognise that criminals don’t respect organisational or jurisdictional boundaries.”
By reaching out to their counterparts in the countries where the criminals are operating, the authorities ensure that these criminals are either prosecuted in those jurisdictions or extradited to the UK. The data shared by consumers is part of the picture supplied to those agencies and in many cases helps facilitate meaningful law enforcement dialogue on a truly global scale.
Never one to rest on its laurels, Aviva’s fraud team is always looking for new ways to broaden its intelligence network, Hazlewood said, and right now the focus is on working with banking institutions. Banks are the hosts for the mule accounts utilised by fraudsters to launder the proceeds of fraud and, by working together sharing intelligence, they can swiftly respond to new threats by tightening controls, meaning the insurer indirectly helps protect consumers against threats such as fraudulent investment bond websites.
Cloned investment bond fraud is particularly perilous to consumers right now given the current investment environment, Hazlewood said, and vulnerable customers, in particular, are being lured through fraudulent adverts on internet search engines and social media. Aviva estimates that, while searching for an investment bond online, a consumer has a 30% chance of the search coming back with a fraudulent website which impersonates big high street brands.
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Consumers are preyed on by fraudsters who pretend to represent well-known high street investment brands to lull them into a false sense of security and, to date, Hazlewood’s team has identified 26 different investment company brands that are being abused by these cloned investment sites with adverts positioned prominently on internet search engines, likely paid for with the proceeds of fraud.
“[The victim] is then asked to pay the investment sum to a bank account and that bank account is invariably a challenger platform account, so it’s a fintech as opposed to a bricks and mortar bank,” Hazlewood said. “But, because of the way that fintechs operate in a number of countries, they don’t have the same level of banking license so the challenger platform will itself have an account with a bricks and mortar bank.”
The insurer has also noted that, due to a recent tightening of fraud controls in traditional banks when it comes to the “payee name” in banking apps, fake companies, the name of the investment company the fraudsters pretend to represent, are now being set up at Companies House in the UK to circumvent the banking app control. Hazlewood cited a recent example of a business with no connection to Aviva which recently changed its name via Companies House to ‘Aviva Business Ltd’.
“They will open a mule account, which the proceeds of the fraud are paid into with a name of a corporation that sounds like Aviva to circumvent the payment controls implemented by bricks and mortar accounts,” he said. “To combat this, Aviva is constantly monitoring for new companies set up in its name and, so far, [we] have found numerous examples by proactively collaborating with Companies House.”
Aviva utilises its ‘Fraud Hub’ to publicise the names and details of these cloned investment sites and fake companies, and updates this frequently to allow any concerned investors peace of mind. In addition, Hazlewood said, the business is working with banks throughout the UK to figure out how best to utilise the legal frameworks available to allow them to share more intelligence and to add yet another essential piece to the insurance fraud solution puzzle.