How the fraud protection system is wrongly brandishing thousands of innocent banking customers

Hundreds of thousands of unsuspecting banking customers could be unknowingly slapped with a fraud marker without even knowing about it.

Financial crime expert Jeremy Asher reveals in his new comprehensive book about the devastating toll that ordinary and, crucially, innocent, people can suffer when wrongly labeled as being linked with fraud.

With university students returning to campuses this week, Asher warns that they are particularly vulnerable to fraud due to financial inexperience.

The rampant growth in fraud-related crime means that two in five criminal offenses are fraud-related, costing the UK economy billions each year.

In response, a public-private defense system has been developed, but a vital part of it involves issuing so-called fraud markers onto individuals and their accounts where a potentially fraudulent transaction or application has been made.

But ordinary banking customers risk being incorrectly labeled with fraud markers, and often only find out when problems with their accounts emerge or requests for loans or credit fail.

This punishment can occur even if a third-party makes an error on an individual’s behalf, or even if a criminal sets up a fake business using someone else’s real identity.

What’s more, trying to get fraud markers removed can push people to the brink, with some even considering ending their own lives.

Huge problem

Around 2 million fraud markers were in effect in 2022 via Cifas, the Credit Industry Fraud Avoidance System, one of the main systems through which fraud markers are delivered.

In-depth research by Asher reveals that in 2022 Cifas itself upheld nearly 17% of the 868 requests to remove its markers, which he believes could mean several hundred thousand markers have been “incorrectly loaded and are unfair.”

The impact on individuals can be significant, with Asher stating that many of his clients seldom discuss the issue publicly even if they have successfully had fraud markers removed.

That’s because of the social stigma they fear due to being the subject of a fraud marker.

Several case studies in Asher’s book bring to life the stress and hardship caused when fraud markers are incorrectly loaded against people.

Issues range from difficulties securing finance through to a heart-wrenching example of a female victim of domestic abuse, whose repeated efforts to prove her innocence continually fell on deaf ears.

“Her mental health declined and following a desperate call from her in which I was left in no doubt that she was about to attempt suicide I called the police who thankfully went to her immediate assistance,” Asher says.

“She did not have the stomach to take her appeal further.”

Easy come, difficult go

A significant issue with fraud markers is how easily they can be applied but how difficult, or sometimes even impossible, they are to have removed.

Asher states that many of the cases he takes on for people wrongly given fraud markers “would not have come to my attention had a criminal standard of proof been applied and thorough investigations taken place.”

He criticizes the move to lower the standard of proof that organizations need to jump, likening it to reducing it to a civil level even though the victim is essentially being accused of a criminal offense.

“[Fraud markers] are akin to the type of fixed penalty notices that are imposed in the criminal justice system, such as by the police in relation to minor motoring offenses,” Asher said.

“However, there are important distinctions, not least that fraud markers are issued without notice, they are secretive, and there is no right to judicial oversight at the time a marker is loaded.”

Asher notes that while a speeding driver can challenge the evidence, accept the proposed penalty, seek an alternative penalty (like a speed awareness course) or ask a court to decide their guilt, the recipient of a fraud marker is offered no such routes.

“The punishment aspect of fraud markers is through the subject being barred from obtaining mainstream credit and banking facilities or by having to pay a premium should they be lucky enough to find an organization willing to accept the higher risk posed,” Asher added.

Post Office parallels

Trying to appeal a fraud marker is ‘anything but straightforward,” according to Asher, who notes the injustices against ‘genuinely innocent’ people is likely to be wider than that caused by the Post Office Horizon scandal.

In an echo of the Post Office saga, organizations that load fraud markers are essentially the notional judge, jury and executioner.

“The concept of fair banking is more concerned with ensuring that the products and services offered by financial organizations are fair,” Asher states.

“As demonstrated, fraud markers are loaded and policed by private organizations, with some organizations paying little regard to common notions of justice and fairness.

“Their decisions can be unfair, cruel even. I am concerned at the level of injustice I see every day.”

The book contains information about how the various databases operate, and explains how and why they were developed to help combat the rise of fraud and money laundering in the UK.