Payroll professional developmentIdentity fraud

Linda Pullan

Head of Content, Training & Qualifications

Payroll Alliance

Identity fraud

• The Fraud Advisory Panel (FAP) is an independent body of volunteers from public & private sectors

• FAP is a registered charity

• Its aim is to raise awareness of the social & economic damage caused by fraud

• 100,000 people are affected each year by fraud

• Identity fraud costs the UK over £1.7 billion per year

• Experian Information Services reported identity fraud up 70% in second half of 2006

• Companies are often targeted for information or documentation

Identity fraud

London remains the identity fraud capital of the UK

Identity fraud

• Top 25 at risk areas for fraud found within M25

• People living in the capital are two and half times more likely to be hit by identity crime

• 50% unaware that they are victims

Identity fraud

• Common definitions of fraud are: - forgery- deception - false pretence- false accounting - to gain a pecuniary advantage

Identity fraud

• Fraud is often perceived as perpetrated by one or two employees for personal gain over short periods of time

• Fraudsters are often coerced into obtaining information and documentation

• Organised crime is often behind the fraud on a massive scale!

Profile of a fraudster

• Under 25 or over 40

• 80% of fraud involves an employee of the company

• 90% are with the company over a year

• 32% are with the company 10 years+

Identity fraud

• In a recent study it was revealed that 66% of those under 30 have at some time given friends or family details of

– PIN numbers– Full bank account details– Online banking passwords

• This compares with 40% of 30 – 50 and 33% of over 50s

Identity fraud

• Martin Gill, an identity theft specialist & professor of criminology, said that the number of ID thefts was far higher than reported

• Official figures have risen from 20,000 in 1999 to 137,000 in 2005

• However according to Professor Gill many cases go undetected

Identity fraud

• Those under the age of 30 are more at risk because they change their addresses more frequently & post is not redirected

• Experian said present address fraud has increased 45%

• This provides potential fraudsters with valuable information

Identity fraud

• All frauds have three things in common:- Inducement- The deceit- The result or effect

• Many crimes require a constant supply of clean personal identities to remain undetected

Identity fraud

• To gather information people are placed in employment positions within organisations where useful databases exist (most UK businesses)

• Their aim is to capture any personal data

Identity fraud

They rely on the fact that CVs & previous employment records

of applicants are not thoroughly checked

Identity fraud

• Fraudster’s remit is to capture the data of a company’s:

– Clients – Customers– Staff

Identity fraud

Payroll & HR departments are particularly vulnerable to fraudsters

because they hold information useful to them

Identity fraud

• This information includes:

– Dates of birth– NINO– Addresses– Bank details– Details of earnings including P60s– Employment history

Identity fraud

• Fraudsters need the info to:

– Obtain benefits, tax credits or loans applicants/claimants

• To make a claim, applicants must produce certain documentation:

– Passport, payslips, P60s, birth certificates, utility bills, bank statements

Identity fraud

• The biggest problem in the fight against fraud is sometimes your employees!

• This is because they fail to protect themselves against fraud

• They often insist on additional personal details being held on their payslips

• Such as bank details, NINO, address

Identity fraud

• How to minimise the risks:

– Dispose of all sensitive data by cross shredding it. Don’t just put it in the bin!

– If data is disposed of by contractors they must be licensed by the local authority

– Don’t put employee’s full bank details on the payslips

Identity fraud

• How to minimise the risks:

– Ensure CVs & employment histories are checked for new staff

– Keep strict control of passwords & access to sensitive data

– Ensure leavers & transfer’s passwords are deleted from the payroll/HR system

Identity fraud

• Many people believe that national ID cards will solve the problem

• But that it might mean that fraudsters only have to produce one piece of ID not several

• One of the main obstacles has been cost

£93-£300 each

• Newspapers are reporting that the Government will be charging banks etc to access info

Personal Security

• Fraudsters have found ways of withdrawing cash without PIN numbers

• This can be done at the majority of banks if they have secondary proof of ID such as a second credit card

• One victim lost £1250 in this way

Personal security

• Never reveal PIN numbers & passwords

• Avoid using cash machines in public places on a Friday afternoon

• Check your bank/credit card statements

Personal security

• Check your bank/credit card statements

• Never confirm passwords etc in an email from the ‘bank’ – it’s bogus

• Don’t agree to help foreign businessmen get money out of the country using your bank account

Payroll security

• Section 8 Asylum & Immigration Act requires you to make checks on potential employees & copy that info

• Always make sure that the documents are originals not photocopies

Payroll security

• Employees provide documentary evidence to claim a variety of things

• For example statutory payments e.g. MATBI to claim SMP

• Passport or birth certificate for NI exemption

• Always ensure they are original documents

Any questions?