Countering Fraud in Student Funding

Fiona Innes

Head of Counter Fraud, Counter Fraud Services Department

March 2016

Content

• Introduction

• Background & Structure

• What we do

• How we do it

• Case Studies

• Consequences Model & Prosecutions Framework

• Phishing

• Fraud Triangle

• Proactive Prevention

• Stats

• What you can do

• Questions

Introduction

Counter Fraud Services

• Background

• Structure

CFS Investigations

Counter Fraud Services is now made up of 5 individual Investigation Teams, each

one aligned to a key business area.

• Maintenance Loan and Grant

Eligibility and Entitlement, Phishing, Identity, Residency

• Disabled Student Allowance

Non-Medical Helper, Taxi, Equipment, Assessments

• Grants for Dependents

Child Care, Adult Dependent Grant, Parental Learning Allowance

• Institutional & Organised

Qualifications, Attendance, Organised Targeting of Learning Provider

• Repayments Evasion

Avoiding Repayment

CFS Structure

Head of Service

Fraud Manager Fraud Analytics Manager Investigations Manager

Team Manager

GFD

Team Manager

DSA

Senior Analyst

Team Manager

Maintenance

Loan/Grant

Team Manager

Repayments

Evasion

Sanctions Officer 2nd Tier Review

Officer Senior Analyst

Investigators (6)

Investigators (4)

Investigators (6)

Investigators (6)

Investigators (6)

Analysts (2)

Analysts (2)

Glasgow

Darlington

Team Manager

Institutional Fraud

Investigative Assistant

What do we do?

Within Counter Fraud Services we

• Investigate potential Fraud

• Analyse confirmed Fraud

• Review Sanctions

Ultimately our goal is to protect customer information and prevent the loss of

Tax Payers money.

How do we do it?

We have established a number of techniques over the years which

enable us to Prevent and Detect Fraud, some of these include;

• Investigative Training for all staff

• Analytics

• Fraud Prevention Tools

• Internal and External Referrals

Case Studies

Example 1 – Marital Status

Background

In August 2015, SLC’s formal appeals team contacted CFS to raise concerns over the marital status of an individual

they had been corresponding with.

The student had applied for funding as a single person but had provided a Council Taxi bill showing both his name

and another individual with the same surname at the home address.

Investigation

As a result of the referral CFS undertook an investigation and requested evidence from the student.

We also checked open source information and found that the individuals Facebook page confirmed that he was

married.

A formal telephone interview was carried out at a pre arranged time and further evidence gathered.

Outcome

For providing false marital status information on his application and throughout the CFS investigation, the individual

was deemed unfit to receive funding due to misconduct.

This resulted in a saving of over 10k.

Case Studies Cont..

Example 2 – Insider Threat

Background

In April 2013, CFS Analysts identified a number of Student Loan applications that they believed to be fraudulent. In total,

they identified 98 suspect applications that were part of the same group.

Initial checks suggested that the applicants themselves were genuine individuals and that there were no indicators of

potential identity thefts.

.

CFS Analysts made enquiries with the College involved and established that the College had no knowledge of any of the

applicants, despite 44 of them having had their attendance confirmed.

Investigation

The matter was reported to the Police and the investigation concluded that an employee of the College, previously known

to the Police, along with two others had recruited as many people as they could to create Student Loan applications and

using another employees User ID, confirmed attendance and therefore released Student Finance payments.

Outcome

On Monday 10th August at Southwark Crown Court,

Suspect A was sentenced to 2 years imprisonment for his part in this fraud.

Suspect B was ordered to carry out 120 hours of unpaid work and given a 6 month suspended sentence.

Suspect C was ordered to carry out 120 hours of unpaid work and was told to pay £1000 in compensation.

Of the 44 applications that Suspect A confirmed attendance for, 27 received payments totalling £170,416.58.

Across all 98 applications involved, payments totalling £712,713.42 were blocked from being paid.

Phishing

What is Phishing?

Phishing is the term given to a type of fraud which involves a third party emailing an individual

pertaining to be from an organisation when in fact they are not. The individual, believing the email to be

genuine, verifies personal information, which allows the third party to amend their online records and

redirect money to another bank account.

What do SLC do to prevent Phishing?

• Active account monitoring of previously affected and high risk accounts.

• Customer text alerts to students whose bank account details have been amended.

• Duplicate bank details reports monitored daily.

• Outbound calling to students identified as being at risk of payment diversion.

• Contacting universities directly if there are specific attacks against their students.

Variations of this type of fraud are

Vishing – This is when individuals call landlines or mobiles in an attempt to make you divulge personal

information.

Smishing – As above, only by SMS via mobiles.

£0

£200,000

£400,000

£600,000

£800,000

£1,000,000

£1,200,000

£1,400,000

£1,600,000

£1,800,000

Apr Sep Jan Apr Sep Jan Apr Sep Jan Apr Sep Jan Apr Sep Jan

11/12 12/13 13/14 14/15 15/16

SLC Phishing Volumes Total Lost Total Saved

Phishing Stats

SLC first suffered a major phishing attack in FY 11/12 and since then, the

preventative measures put in place, and the steps taken to increase student

awareness, have drastically reduced the losses and number of victims affected.

Consequences Model & Prosecution Framework

Consequences Model

The Consequences Model used by Counter Fraud Services has been in place

for a few years now and ensures we have consistency in our approach to

decision making.

The model was created based on a Police model used to establish the level of

crime committed and for deciding on the appropriate sanction to apply.

Prosecution Framework

The Prosecutions Framework currently being put together takes the

Consequences Model to the next level and will document the options for

progressing a confirmed fraud case.

Fraud generally occurs as a result of a

combination of factors.

For many years, this has been

represented as the “Fraud triangle”

• Motivation – need or greed?

• Rationalisation – most people obey the law but can rationalise fraud “ as a victimless crime” or it’s just a fiddle, not really a crime.

• Opportunity – weak controls, poor security, low likelihood of detection.

Opportunity

Fraud Triangle

Motivation

Proactive Prevention

SLC have a number of checks in place that help prevent fraud.

• Our primary method of identity verification is through the Identity and Passport

Service (IPS) link that uses the applicant’s passport number to verify the

identity details they have submitted.

• The applicant’s National Insurance Number (NINO) is also matched against

DWP records.

• The Verification of Household Income (VHI) checking service allows the

income of the students sponsor/s to be validated via HMRC.

• Once the application has been processed, the University’s attendance

confirmation provides us with a further check to ensure that the individual

is in attendance before the instalments are paid.

CFS receive exception cases highlighted as part of the above checks.

Proactive Prevention Cont...

Fraud Prevention Tools

CIFAS

CIFAS collates all fraud data from organisations such as Banks, Building

Society’s, Insurance Company’s plus many other financial institutes. The

referrals from CIFAS will take priority as they include actual fraud cases,

this means any matches we have with this data will be due to the student

having committed fraud against another organisation.

Electoral Register

This service enables us to verify if a customer is living as stated and who else

resides at the address given.

Stats

Since Academic Year 2012/2013, CFS has prevented fraud losses totaling

£62 Million.

With the recent restructure and increase in capability, we forecast savings of

around £20 Million for Academic Year 2016/2017.

£14.7 Million

£16.7 Million

£15.1 Million £15.2 Million

£20 Million

12/13 13/14 14/15 15/16 16/17

Total Value Saved

What Can you Do?

Whatever Department you work in, you can do your part to reduce the impact of fraud. You may not realise the

part you can play however do not underestimate your involvement in Fraud Prevention.

All members of staff and colleagues, have a duty to report suspicions of fraud, both internal and external, and raise

concerns where areas of weakness in procedures are identified.

HEI’s can get involved by reporting any irregularities they become aware of, particularly in relation to:

• Attendance; and/or

• Status

If you have any concerns relating to potentially fraudulent activity please contact us using either

Email: institutional_cfs@slc.co.uk

Phone: 0141 243 3583

If you receive a call from a student who has not received their expected funding on the payment date due, and their

bank details have been amended without their consent, calls should be put through to the phishing hotline on

0141 243 3583.

If a student has received an email asking them to verify their personal information by clicking on a link contained within

the email, this should be passed to phishing@slc.co.uk

Contact name – Fiona Innes

Department/Role – Counter Fraud Services,

Head of Counter Fraud Services

email fiona_innes@slc.co.uk

phone 0141 243 3487

website www.slc.co.uk