ablender
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Post by ablender on Mar 29, 2016 18:59:30 GMT
I think it is important to bring to this issue to the attention of the P2P community. I was reading a thread on the Funding Knight board ( kayfundingknight) p2pindependentforum.com/post/54339/threadwhich raises alarm bells in my head. In brief (as I understand it) there can be cases where the police do not act on cases of suspected fraud, or somehow put platforms in a situation (disable them) from acting on lenders' behalf. Also it seems that ActionFraud might not be as good a tool in such cases as one might think. Can you please look at the thread linked above and see if you understand this in the way I see it. I am putting links here to people I know from various platforms and would appreciate official input from them. As I said this can be a vulnerability directly at the heart of how P2P works and can potentially be exploited by . . . . savingstream, MoneyThing, chris, ablrateandy, lendingcrowd, fundingsecure, rebsrepI could not find a representative for Funding Circle. If anyone knows of any other representatives that might be interested in this, please let them know. |
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Post by mrclondon on Mar 29, 2016 19:28:37 GMT
ablender a proportion of loans to SME's will have been obtained by deception, just as a proportion of loans to individuals will have been obtained by deception. It doesn't matter whether the lender is a p2p platform or a bank. Just a sad fact of life.
A proportion of all unsecured loans will have been obtained by deception, and recovery will be minimal / zero in such cases. I understand the point you're trying to raise about the salami claims needed within p2p, but banks would normally just write off the whole debt in such cases as the cost of legal action to recover peanuts isn't justified.
The FK loan you refer to is interesting because we (FK lenders) were the only creditor to object to the CVA. The other creditors knew it better to secure the few pennies in the pound on offer.
I was a lender on YesSecure/Encash which had a massive deception on a pair of personal loans (a bf/gf pair), where fraudulent payslips, P60s, tax records, energy bills etc had been provided. The money was long gone, although one of the 2 did pay back the majority eventually.
Capital losses on p2p loans will occur, and have to be factored into expected net returns. Some losses will be as a result of dubious behaviour by borrowers either before or after drawing down the money.
This issue is IMO limited to those platforms providing unsecured loans without a provision fund, so FC, FK, ReBS and probably Money&Co.
EDIT: You'll need to raise this issue on FC's own forum if you want attract their attention.
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ablender
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Post by ablender on Mar 29, 2016 19:39:16 GMT
What strikes me is the fact that the police seem to be uninterested to take any action. Do I understand it correctly that fraud is a criminal case?
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Post by mrclondon on Mar 29, 2016 19:44:18 GMT
What strikes me is the fact that the police seem to be uninterested to take any action. Do I understand it correctly that fraud is a criminal case? Yes, but in this case the police investigation found "there is insufficient evidence available to confirm criminality on the part of [the borrower]" as per the formal response from Thames Valley Police Financial Crime Support Team.
However paul123 is right in so far as this was a miniscule loan, and wouldn't really be a priority for an in depth investigation. As I said banks wouldn't normally report such a matter for the small amount of money involved.
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Post by andrewholgate on Mar 29, 2016 19:58:04 GMT
Fraud is a huge business and when successful it is highly lucrative for the fraudsters. That is why they take the risk of doing it. In the modern age, information is easier than ever to access. Computers make it easier to replicate documents and the faceless interface of the Internet means that fraudsters can act at arms length.
Banks have have learned over many hundreds of years how frauds happen and how to spot them, however they still lose money through fraud. When a new industry comes into play, especially one that has such a high profile such as P2P, then fraudsters will try their luck.
Diligence is the biggest combatant of fraud. Knowing what looks like a fraud and asking the right questions plays a big part. One of the best methods to combat fraud is the face to face interview with the borrower. The sixth sense that something doesn't add up kicks in and causes you to ask questions. There are questions you ask your self:
- is this person genuine?
- do they really understand their industry?
- are the business premises fit for purpose?
- is it busy/operating as it should?
- does the scale of operations match the financial accounts?
- can you get independent verification of the data/person/industry.
- is it too good to be true?
- can you phone the main switch board and contact the main person via that?
and many many more questions.
Kick the banks as hard as you want, but the do teach about fraud and also have regular and repeat training on fraud prevention. Time served bankers / lenders have that experience. You cannot forget the fin part of Fintech.
the simple fact is, the fraudster has to be lucky once, we have to be vigilant all the time. Assetz Capital do face to face meetings as part of the diligence process, but I cannot guarantee that there will never be a fraud. At some point in time, we will be targeted.
I cannot not speak for the police, but I believe there has to be enough evidence to launch a case. Again this is why we go into the detail that we do. The more detail we have, the better the chance of building a case against fraud. Ideally we'd spot it before a loss. We cannot indemnify you against the losses, but we do everything we can to spot fraud through intense due diligence.
I hope that helps.
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Post by bracknellboy on Mar 29, 2016 20:15:12 GMT
Fraud is a huge business and when successful it is highly lucrative for the fraudsters. That is why they take the risk of doing it. .... One of the best methods to combat fraud is the face to face interview with the borrower. .... ... : as always, thank you for the posts you make which are intended as general education to the community. With regard to the f2f interviews: does that include meeting them at their home location, for example just to be sure that it isn't somewhere in Essex, perhaps between the M25 and the M11 ?  No need to respond: I am of course being entirely mischeivious. In addtion I am of course making no connection between a theoretical borrower and any discussion on fraud. Just to be entirely clear.
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ablender
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Post by ablender on Mar 29, 2016 20:42:43 GMT
What strikes me is the fact that the police seem to be uninterested to take any action. Do I understand it correctly that fraud is a criminal case? Yes, but in this case the police investigation found "there is insufficient evidence available to confirm criminality on the part of [the borrower]" as per the formal response from Thames Valley Police Financial Crime Support Team.
However paul123 is right in so far as this was a miniscule loan, and wouldn't really be a priority for an in depth investigation. As I said banks wouldn't normally report such a matter for the small amount of money involved.
A minuscule loan can be the way to explore and identify weaknesses in a system to be exploited later for larger amounts by people who would like to abuse. That is why I am raising questions here. Do we need to be concerned about whether the various P2P platforms are able to represent us in a case of fraud? Are the systems already in place?
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shimself
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Post by shimself on Mar 29, 2016 21:00:02 GMT
...I cannot not speak for the police, but I believe there has to be enough evidence to launch a case. ... Thankls for giving a serious reply. The OP's original point is that someone in the police is contending that a fraud prepetrated on a p2p platform will be 1000 small ticket frauds rather than one fraud for the full amount (and therefore not followed up). Of course they might be wrong. Can I ask you to have a special marketing campaign aimed at getting investors from the high ups in the police and CPS, that might work?
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registerme
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Post by registerme on Mar 29, 2016 22:30:52 GMT
I understand the various comments provided to date, but I think they miss the point.
The fact that a bank suffers a fraud, and writes it off because it is not material, does not stop it being a crime. In this case the bank's shareholders effectively take the hit, but are abstracted from it precisely because they are shareholders. As lenders, with p2p we have direct credit (/interest rate / market / business etc) risk with the borrower. We also face direct fraud risk. Say, for instance, that a borrower took out a £1 million loan and made off to sunnier climes with it. The fact that a thousand of us lent £1000 each to the borrower makes it no less of a crime.
My suspicion is that ActionFraud are simply not well placed to deal with things like this. That is not an excuse for the enforcement agencies not to have plans in place to become well placed to deal with things like this.
I also think the "you need to make a claim individually" line is fundamentally flawed - think any number of class action suits / time share frauds / Ponzi schemes etc you care to mention. Bottom line, I think individual lenders need to take a harder line with platforms and make them take a harder line with the enforcement agencies. If we don't do this it's open season.
I wonder what the UKP2PFA has to say about it?
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Post by jackpease on Mar 30, 2016 6:21:27 GMT
I also think the "you need to make a claim individually" line is fundamentally flawed - think any number of class action suits / time share frauds / Ponzi schemes etc you care to mention. Bottom line, I think individual lenders need to take a harder line with platforms and make them take a harder line with the enforcement agencies. If we don't do this it's open season. I wonder what the UKP2PFA has to say about it? Flawed indeed but i think lenders' and platforms' hands are tied. I raised this when i lost money in that FK one - as I see it FK were told that the criminal fraud was not against them - rather the myriad of lenders. I don't believe myriads of lenders are allowed/can practically take forward fraud as a criminal 'class' action (just civil cases). Ergo fraudsters are currently untouchable in the criminal courts if they apply to p2p - some platforms are currently experiencing a spate of early failures and I wonder if this loophole is being exploited. Jack P
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Post by andrewholgate on Mar 30, 2016 6:32:42 GMT
...I cannot not speak for the police, but I believe there has to be enough evidence to launch a case. ... Thankls for giving a serious reply. The OP's original point is that someone in the police is contending that a fraud prepetrated on a p2p platform will be 1000 small ticket frauds rather than one fraud for the full amount (and therefore not followed up). Of course they might be wrong. Can I ask you to have a special marketing campaign aimed at getting investors from the high ups in the police and CPS, that might work? There is a legal point I'm taking some advice on. Is the fraud against the agent for the lenders or the lenders individually? I'll revert when I have some clarity. A
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james
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Post by james on Mar 30, 2016 6:32:47 GMT
Ergo fraudsters are currently untouchable in the criminal courts if they apply to p2p - Since in an identity fraud case in one of my loans the individual has been criminally convicted it's far from universally true that criminal action can't happen and succeed.
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Post by westonkevRS on Mar 30, 2016 6:39:06 GMT
If anyone knows of any other representatives that might be interested in this, please let them know. Did I and RateSetter do something to offend you? Arh well as someone that once managed the Fraud team at RateSetter, has met representatives of (no)Action Fraud, the MET, has prosecuted two impersonators and is a member of CIFAS.... perhaps I could have added some value. I'll just get back to the day job. Kevin.
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SteveT
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Post by SteveT on Mar 30, 2016 7:05:11 GMT
If anyone knows of any other representatives that might be interested in this, please let them know. Did I and RateSetter do something to offend you? Arh well as someone that once managed the Fraud team at RateSetter, has met representatives of (no)Action Fraud, the MET, has prosecuted two impersonators and is a member of CIFAS.... perhaps I could have added some value. I'll just get back to the day job. Kevin. I presume he simply doesn't know you! Can't find any posts from ablender on the Ratesetter board so perhaps he doesn't lend there.
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Post by oldnick on Mar 30, 2016 7:12:44 GMT
If anyone knows of any other representatives that might be interested in this, please let them know. Did I and RateSetter do something to offend you? Arh well as someone that once managed the Fraud team at RateSetter, has met representatives of (no)Action Fraud, the MET, has prosecuted two impersonators and is a member of CIFAS.... perhaps I could have added some value. I'll just get back to the day job. Kevin. Please, do tell!
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