Cifas

Cifas is a fraud prevention service in the United Kingdom. It is a not-for-profit membership association representing organisations from across the public, private and voluntary sectors. Cifas states its mission is "to detect, deter and prevent fraud in society by harnessing technology and working in partnership".

Cifas operates two core fraud prevention databases that are claimed to be the largest in the UK: the National Fraud Database and the Internal Fraud Database. Its systems are also used by banks and building societies to access Home Office immigration data through a specialist portal.

Data from Cifas' members reveals that instances of identity fraud in the UK are at record levels in the UK, particularly among people aged under 30.

Cifas data also highlights the growing issue of "money mules" – people who allow their bank accounts to be used to launder money.

History

Cifas was established in 1988 by the Consumer Credit Trade Association (CCTA) under the acronym CIFAS: Credit Industry Fraud Avoidance System, although the company no longer operates under this acronym as the scope of its services has broadened. It was developed in association with the Office of Fair Trading, as well as the Information Commissioner's Office, who continue to this day to take an active interest in the development of Cifas.

Cifas is today run by a board of directors, which includes both independent directors who are not directly involved in the day-to-day running of the organisation, and the Chief Executive and Chief Operating Officer, who are. From 1988 to 2016 the majority of the directors were elected by participating organisations. They now participate in the governance of the organisation through an "Advisory Board".

Fraud databases

Cifas' National Fraud Database allows participating organisations to exchange details of applications for products or services which are considered to be fraudulent, inconsistent or suspicious; exchange information about accounts and services which are being misused; and information about insurance and other claims that are considered to be fraudulent, inconsistent or suspicious.

Organisations can also exchange information about innocent victims of fraud to protect them from further fraud.

The Internal Fraud Database allows participating organisations to exchange details of cases where an applicant or member of staff is considered to have acted fraudulently. Individuals suspected of committing fraud can have a fraud marker placed against them, and they may be denied financial services such as mortgages, credit or even phone contracts.

Under the Data Protection Act, an individual has the right to make a subject access request to Cifas, who will, in accordance with the Act and its exemptions, disclose data held on the individual where the law requires it. Cifas is not a credit reference agency but is the data controller for Cifas data and responsible for its accuracy.

Complaints

All warnings used to be examined by specialist fraud staff in participating organisations, but now, automated systems may be used to refuse a product or service without any investigation of a warning. Cifas says: "The ability to make automated decisions allows members to immediately decline facilities to subjects who are deemed an immediate fraud risk. This is another massive step forward in utilising the data from Cifas, freeing up resources from reviewing referrals that have already been deemed a high fraud risk."

Consumers who are disadvantaged by this change in practice may complain to the Information Commissioner and seek financial compensation from both Cifas and the responsible organisations who supplied and used the information. Consumers may also complain to one of the ombudsman services who cover the organisations represented within Cifas. This includes the Financial Ombudsman Service, the Communications Ombudsman, the Public Services Ombudsman, and the Local Government & Social Care Ombudsman.

Immigration Act 2014

In 2014, the Immigration Act became law. Cifas was named as the sole provider of Home Office Immigration Data and launched the Cifas Immigration Portal (CIP) in December 2014. All current account-providing banks and building societies in the UK are required to use the CIP to access the Home Office data on disqualified persons. The data was implicated in the Windrush scandal.

Other services

Victims of identity fraud or people who are at risk of identity fraud can apply for Cifas protective registration for a £30 fee. Protective registration acts as a warning the organisation should (but they are not forced to) carry out additional checks to verify the identity of the applicant or customer. They may just refuse the product or service instead as they consider the fraud risk to be too high.

Cifas used to operate a Protecting the Vulnerable scheme that helped local authorities protect individuals subject to the Mental Capacity Act 2005 in their care. This was merged into the Vulnerability Registration Service in 2020 https://www.vulnerabilityregistrationservice.co.uk

Financial stability

Cifas has declared losses in its published accounts as follows:

Losses between 2017 and 2022 amount to £5.1 million in total. In 2023 Cifas returned to a surplus.

The Directors reports consider that the organisation is a well funded going concern with break-even achievable. Costs grew from £5.6 million to £13.3 million between 2016 and 2023. Cifas is funded largely from levies on financial services suppliers and other participating organisations funded by customers, and public sector organisations that are funded by taxpayers.

The financial benefits of Cifas, reported by its participating organisations, are reducing relative to its size, with benefits per pound of subscription income as follows:

The published value of fraud prevented by Cifas is up by approximately 80% in the last ten years, from £1 billion to £1.8 billion in 2023 (up from £1.3 billion in 2022, suggesting the methodology has been updated) while costs and staff numbers have nearly trebled. The amount of fraud prevented by Cifas, as a proportion of total losses, suggests it has become much less effective.

Reserves

Cash reserves are calculated in the 2023 accounts to be £4.5 million but calculated reserves are not the same as cash available to fund investment. The net cash position shows intangible fixed assets being capitalised to the value of £3.2 million. This represents IT work that has been paid for from cash but the cost is charged to the accounts over 5 or 10 years. Only depreciation is charged to the annual profit and loss account. It is analogous to loaning one's savings to oneself to spend on a car, and repaying the savings account in instalments over 5 to 10 years, while treating the value of the car as a savings account balance. This type of creative accounting is allowed by the law and is used by multi-national companies regularly, but it is unusual in the charity and not-for-profit sector.

This means the real reserves are not the £4.5 million shown in the 2023 accounts but £1.3 million, which also has to cover £1.6m of debtors, leaving a £300,000 shortfall. Best practice in this sector is to hold cash equal to 6 to 9 months of operating costs as reserves.

Debts

Debts rose from just £76,000 in 2015 to £1.6 million in 2023. This represents a significant deterioration in control of credit, with the working capital tied up, also funded from cash reserves.

Remuneration

The 2023 accounts show that Cifas paid its current chief executive £287,783. The lowest paid staff are in outsourcing companies used by Cifas who received the national minimum wage of £10.42 per hour in 2023. The chief executive received 15 times more than these lowest paid workers, down from 16 times in 2022.

Cifas is no longer listed as being a Living Wage Foundation employer (£12.00 per hour or £13.15 in London for 2023), suggesting that Cifas no longer meets their requirements. Cifas was one of the first organisations to become a Living Wage Foundation accredited employer.

The average salary at Cifas in 2023 was £76,227 (£41.88 per hour) compared to £69,956 in 2022, £68,788 in 2021 and £63,209 in 2020.

Careers at Cifas

Cifas employs staff in a variety of different functions that include information technology, data analysis, compliance, best practice, consumer relations, project management, sales and marketing, product development, training, administration, external relations and public relations, human resources and finance. There were numerous redundancies in 2017, 2018 and 2019 with severance payments reported in the annual accounts at Companies House. Staff numbers have since expanded with recruitment to new positions.

Collaborations and partnerships

Cifas works with fraud prevention, financial, public sector, academic and charitable organisations and law enforcement to raise awareness of fraud and promote best practices in fraud prevention. Collaborative partners include the City of London Police, CIPFA, the Home Office, Age UK, the Fraud Advisory Panel, and UK Finance.

See also

* Credit card fraud
* Identity fraud

References

External links

* {{official website, https://www.cifas.org.uk/
* Fraud Advisory Panel charity, corporate member organisations

Databases in the United Kingdom
Fraud in the United Kingdom
Organisations based in the London Borough of Camden
Fraud organizations