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How Fraud and Identity Solutions Can Fight Pet Crime

TransUnion
Blog Post12/17/2021
Business Customer Analytics Fraud and Identity Management
Blog image for How Fraud and Identity Solutions Can Fight Pet Crime

Pet crime: How Fraud and Identity Solutions Can Help to Counter a Growing Problem

The rise in pet crime, including ‘dognapping’ and pet insurance fraud, carries an emotional and economic impact for consumers and risk for businesses. With the UK Government publishing their Pet Theft Taskforce Policy Paper (autumn 2021), there’s an opportunity for specialist data and identity solutions to help sniff out and track criminals to better protect owners, their pets and pet-related businesses.

Shopping for treats: Pets represent significant parts of household spend

Shopping for treats: Pets represent significant parts of household spend

During COVID-19, pet ownership increased as people sought companionship and emotional connections. Between March 2020 and March 2021 3.2 million pets were bought, with an estimated 17 million UK households (59%) having a pet.

Having a pet is an expensive addition to a household budget. A puppy can cost anywhere between £400–£3,000 depending on breed. Additionally, the average insurance premium based on policies sold between May 2019 and May 2020 came to £436.02, with the average claim amount being £385.32 for the same period. The UK pet insurance market is projected to reach £1.9 Billion in 2025.

The way we look after pets is also changing in line with our lifestyle choices. Pet owners have moved from feeding animals simple, off-the-shelf food and treats to supplements or even tailor-made meals, as well as buying pricey toys and clothing. It could be family movie night and your dog could be watching along while enjoying a tub of Jude’s Ice Cream for Dogs wearing a Dsquared2 hoodie!

In 2018, it was estimated a cat could cost £12,000 across its lifetime; a dog slightly less. The sprawling pet retail category — plus inflation — suggests these figures have skyrocketed. As animals become increasingly central to family life, it’s important to find ways to protect them and ourselves from pet crime.

The emergence of pet crime in the UK

The emergence of pet crime in the UK

Our Device Risk Database provides insights into how businesses and consumers are impacted by fraud. In 2021, we looked at how the pandemic (Jan. 2020 to March 2021) crystalized the pattern for criminals to follow consumer and business trends. Increased pet ownership and the growing pet market is likely to have caught the attention of organised criminal gangs and opportunistic criminals, especially as the price for five of the UK’s most sought-after breeds grew significantly (some by almost 90%) during the first lockdown, according to Dogs Trust.

Through media reporting, social media and signs in parks, dog owners are hyper aware of theft, confronted by terrifying stories and those that pull at heart strings. Dog theft is estimated to have increased by 250% since the pandemic, fueling a criminal market involving reselling, smuggling, importing pets with fake microchips and ransom cases. Though it’s important to note, whilst perception of pet theft is fairly high, risk of the crime is low — just 2,000 incidents of dog theft were reported to police forces across England and Wales in 2020 (unpublished data). However, the emotional distress of someone stealing a pet that’s a close companion (especially assistance dogs) is too powerful to quantify.

Fraud is another type of pet crime and can be split into fake sellers and insurance fraud.

In the former, individuals are lured with fake ads on social and pet platforms. They put down a deposit and expenses — on pets that don’t exist — and potentially lose thousands of pounds. Action Fraud reports more than £2.5 million were lost to criminals through fake pet adverts during the 20/21 financial year. Major pet retailers have said they’re strengthening efforts to reduce fraudulent ads on their platforms, but obviously there may be other marketplaces unaware or unwilling to address this issue.

In terms of insurance, the drop in car miles driven during COVID-19 led to fewer vehicle-related claims, meaning more time for claims investigators to examine evidence and highlight fraud. Conversely, the rise in pet ownership has presented new opportunities for fraudster to exploit and new challenges for insurers looking to validate claims.

The question in general is: What practical steps can be taken to counter pet crimes?

Paws for thought: The opportunity for data identity solutions to take the bite out of pet crime

Paws for thought: The opportunity for data identity solutions to take the bite out of pet crime

The 2021 the UK government set up a taskforce to tackle pet crime. The policy paper delivered in the autumn 2021 includes: The need for greater detail to be registered on dog microchip databases; improvements on how the databases are accessed and function; and more robust rules around the notification of keepership changes.

As part of these efforts, pet-related businesses can take a lead in shaping how verification data solutions can complement agency efforts to make the sector less appealing to criminals.

“The same principles and existing good practice that exist in home and motor industries should be applied to pet insurance,” explains Collin Wallace, Insurance & Partnerships Director at TransUnion in the UK.

“ID verification and fraud prevention in the pet insurance space appears to be lagging behind. Digital risks exist in the faceless and voiceless online world of product purchase, so there’s a need to not only assess the risk of an individual making a transaction but also the likely risk of the email and device being quoted by the applicant. For example, has the email or device been associated with fraud in the past? Can the email be linked to the applicant? Does the device have a different geolocation to the address of the applicant? Is the applicant’s identity sufficiently proven?”

“Pet insurers — whether dealing with dogs, cats or any other type of animal needing insurance — should assess their fraud risk. To better identify and detect fraud, they should seek robust, wide-ranging checks via a comprehensive fraud and identity data solution like TruValidate. Managing threats is also important for consumers as it can impact future premiums. More widely, these insights could be used by marketplaces dealing with pets, vet practices and agencies wanting to build a better picture of criminal behaviour vs. genuine owners.”

Pet insurers focusing on additional layers of identity checks during the customer journey should consider the following:

  • Does the identity differ at the point of quote versus point of sale versus point of claim?
  • Is there a need for more robust anti-impersonation checks; perhaps incorporating official government-issued document verification and biometric comparison? These emerging technologies present opportunities for pet insurers to potentially capture an image of the insured animal at the same time and in the same transaction the pet owner is being authenticated. Likewise, this approach could have a role in online sales and changing ownership.
  • Consumer education — we’ve seen increased messages focused on how prospective and existing owners can protect themselves from pet crime. Pet insurers can look to the wider financial services market to leverage ways to better educate consumers about fraud risks.

Though pet businesses face rising fraud-related challenges, there are strategies to help minimise fraud loses, strengthen customer experiences and improve operational efficiencies. Our fraud consultancy team and insurance industry experts can help you uncover new insights and design optimised onboarding and customer management processes that exceed consumer expectations whilst protecting your business. Get in touch to discuss how we can help you adapt to the new demands of UK’s growing pet market.

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