D&B rings warning bell on fraud

Catalyst for a huge surge in fraud in late 2011: The iPhone 4S.
Catalyst for a huge surge in fraud in late 2011: The iPhone 4S.

FRAUDULENT phone contracts spike whenever a new iPhone is released. For instance, in the two days after the release of the iPhone 4S in late 2011, there was a 156 per cent increase in fraud, according to credit reporting agency Dun & Bradstreet.

As a result of its research, D&B has advised telecommunications companies to stay vigilant, as a higher than usual level of fraudulent applications is expected to continue for about three weeks after the launch last Friday of the iPhone 5.

The research identified criminal hot spots where one in six applications had been fraudulent, compared with a national average of one in 30 applications.

Crime syndicates target stores in Blacktown and Liverpool in New South Wales, Jimboomba south of Brisbane, and two spots in Melbourne - near north Geelong and western Melbourne - according to the research.

There is no evidence that any particular retailer is at risk, apart from those in the hot spots.

''Identity fraud relating to the iPhone 4S was spread evenly across telecommunications providers, but our research shows that fraudsters are skilled at identifying telecommunications providers who have weaker fraud prevention strategies in place,'' D&B's Danielle Woods said.

''The significant rise in incidents of application fraud, which occurred when the iPhone became available last year, provides strong evidence to suggest that similar activity will occur in the coming weeks.''

The data has been released to encourage use of a new ''extreme credit risk'' product that identifies potential fraudsters. It uses the applicant's identity, demographic and behaviour to give a danger profile, giving retailers an opportunity to deny the application.

If a false application is accepted, it is likely the mobile company signing them up for the two-year contract will never be paid by the fraudster.

Incidents peaked in the week after the iPhone 4S launch last year, and applications that were never paid were most likely to be submitted on a Wednesday or Thursday.

D&B claims professional fraud rings submitted on average one application a week in the period after the launch.

This story D&B rings warning bell on fraud first appeared on The Sydney Morning Herald.