How Big is the Fraud Problem in Retail Credit?

It's certainly alarming to note the significant number of accounts that have been opened with no intention of repayment over the past four years, totaling almost 1 million accounts with an exposure of more than three and a half billion Rand. The detailed analysis by OCTAGON BUSINESS SOLUTIONS, especially the gender split and sector-level variations, provides valuable insights into the patterns of potential fraudulent activities

  1. Scale of Fraud:
    • Nearly half a million accounts, with an exposure of over three and a half billion Rand, were opened with no apparent intention of repayment.
    • The impact spans across various retail sectors.
  2. Demographic Trends:
    • Gender Split: Equal gender distribution overall, but variations at the sector level (e.g., personal loans are twice as likely to involve males, while retail apparel is twice as likely to involve females).
    • Age Cohorts: No specific concentration, but certain age groups are more prone to fraudulent activities in specific sectors.
    • Income and Marital Status: Predominantly single individuals earning below twenty thousand rand per month.
  3. Geographical Patterns:
    • No discernible concentration based on geographical location or population density.
  4. Repeat Offenders:
    • Even after committing fraud successfully, consumers are capable of opening additional accounts elsewhere and repeating the same actions.
  5. Sector-Specific Impact:
    • Personal loans showed the highest values in terms of fraud, while retail apparel had the highest volume.
  6. Fraud Scorecards:
    • XDS has developed fraud scorecards utilizing various characteristics of potentially fraudulent consumers for profiling and identification.
  7. Economic Impact:
    • The strained economy is expected to contribute to the increase in various types of fraud.
  8. Continued Risk:
    • XDS predicts that fraud, including the identified patterns, is likely to continue increasing.

OCTAGON BUSINESS SOLUTIONS is offering its Fraud prevention suite of products and encourages businesses to reach out for insights on how they compare to the industry and whether they may be targeted by these fraudulent activities.

If you are interested in understanding your risk exposure and exploring fraud prevention solutions, OCTAGON BUSINESS SOLUTIONS invites you to get in touch for a consultation. They aim to provide meaningful insights to help businesses manage risks during uncertain times

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