CIFAS fraud markers: the warning signs

CIFAS, or the Credit Industry Fraud Avoidance System, is a not-for-profit organisation to which banks and other financial institutions, such as insurance companies, are members.

CIFAS manages the National Fraud Database, the largest database of its type in the UK. According to its website, hundreds of thousands of individuals are added to the National Fraud Database every year.

Member organisations report or load information onto the database where it is suspected that a customer has been involved with fraudulent activity or they present an unacceptable risk to its business. Those reports are known as ‘markers’ and act as a warning to other financial institutions that the customer in question presents a risk, and provides in broad detail through a code system the nature of that risk.

The aim of the database is to reduce fraud risk in the financial services sector by sharing information on customers. Once a CIFAS marker has been highlighted, applications for credit or other financial services may be subject to further checks and thereafter may be refused.

Clearly the banks have the right to protect themselves from fraud, and in doing so protect its customers. The costs of policing fraud in this way is borne by the consumer, through banking charges and application fees.

Unless you have been the victim of a fraud, the existence of such markers is not shown on credit reports generated by organisations such as Experian, and many customers may be blissfully unaware that they have had them marked against their credit history.

So, what are the warning signs that you might have been added to the National Fraud Database? Typically, customers only discover them when they are refused credit, such as when making mortgage applications, applying for car finance or for insurance products, and when applications are made for overdrafts or new banking facilities. If anyone has had a bank account closed without warning, then it is likely that a fraud marker is to blame.

However, the banks do not always load the information correctly or conduct sufficient investigations before loading markers. In those circumstances CIFAS markers can have a devastating impact on businesses and individuals. We have seen many instances where Bounce Back Loans or other forms of lending have been refused to businesses and accounts closed causing people to lose their jobs; be unable to obtain Student Finance; even lose their homes and relationships.

Our team has demonstrable experience of successfully challenging CIFAS markers issued by banks and other financial organisations where they have been incorrectly entered.

In our experience it is always best to take legal advice immediately after you become aware of their existence. Failure to get the challenges right first time can lead to lengthy delays and ultimately disappointment.

In order to ascertain whether you have such a marker registered against you then you need to make a Data Subject Access Request to CIFAS, which will then produce a report outlining the nature of the markers and the organisations that have loaded it.

If you need support relating to CIFAS fraud markers, or would like to find out more about how they could impact you or your business, please get in touch.