The current account fraud that can send victims to prison - are you at risk?

Money mules - enlisting people into a form of current account payment fraud - is on the rise. And it can implicate people in criminal activity without even knowing it.

It's become such a problem that Lloyds Banking Group set up its own in-house team of 'mule hunters' earlier this year - a move that's likely to be replicated by other banks.

The team was formed to stop the movement of money from scams, using new techniques to analyse data and behaviour to identify mule accounts and freeze funds before they get moved elsewhere.

So far the team has frozen £1m of fraudulent cash from being transferred since the start of 2018.

Which? looks at what a money mule is, who is most at risk of being targeted, and how to protect yourself against fraud.

What is a money mule?

Money mules allow their bank account to be used to move around illegal funds, which have likely been accessed through other fraudulent methods.

The criminals who run the scams often target cash-strapped young people via social media, sometimes posing the offer as a form of genuine employment, with the promise of making easy cash.

The pictures below, released from Lloyds, are examples of what these posts might look like.

Those agreeing to take part may not realise they are committing a criminal offence, but this will not be accepted as an excuse by police if you're found out.

This type of crime is on the increase. In its annual Fraudscape report, Cifas - a not-for-profit fraud prevention organisation - reported that in 2017 there had been a 27% increase over the course of a year in the number of 14-24 year olds becoming money mules.

The graph below shows how many money mules have been recorded in each age category, and the increase between 2016-17.

Money mules by age range

Being a money mule is a form of money laundering, which can carry a sentence of up to 14 years in prison.

'Letting your bank account be used to transfer money given to you by someone else makes you a money mule,' warns Katy Worobec, managing director of economic crime at UK Finance. 'When you're caught your bank account will be closed, and you will find it difficult to open an account elsewhere.'

Your credit score will also be damaged, which could affect future attempts to apply for mortgages, loans or phone contracts.

How are 'mule hunters' stopping this fraud?

The pilot scheme at Lloyds has put together a specialist team to monitor accounts receiving fraudulent money.

It's no easy feat, as the number of fake accounts being opened is decreasing - and instead, two thirds of cases implicate existing customers, who have used legitimate details to open their accounts.

Paul Davis, Lloyds' retail fraud and financial crime director, tells us that a third of money mule accounts have been identified as 'unwitting mules' - the kind already described, who are duped into this criminal activity.

Another third are 'witting mules' - account holders who have allowed their account to be used, knowing what they're doing is illegal.

A number of factors are taken into account when detecting a money mule account.

These include monitoring the value of payments going into and out of a customer's account, checking the customer profile, the connection to any other past fraud cases - both within Lloyds and with other banks, whether the account is being managed differently, as well as other shared financial data.

While the current fraud system sees victims contacting their banks after money has been stolen, this scheme freezes funds in suspicious accounts before the transaction has taken place.

If the money has been taken out of an unsuspecting victim's account, the affected banks liaise to try and return it to them.

As for the money mule's account, it will be closed and contact will be made with the customer to inform them of this. There is the opportunity to appeal or query this decision.

While the team is being run on a pilot basis at the moment, Davis hopes it will turn into a core part of the company's anti-fraud strategy.

Lloyds is sharing its findings with other banks, who may follow suit.

How does this fit with other types of current account fraud?

The latest statistics from Experian shows that there has been an increase in fraudulent current account applications, which have contributed to an overall rise in fraud.

While being a money mule is done voluntarily, there is still an increase in fraud where people's identities are fraudulently used to set up criminal accounts.

In 2017, it was found that criminals were behind 159 in every 10,000 current account applications - this is up from 138 in 2016.

It's been found that people who rent, or have their post left in communal areas - are particularly vulnerable to this kind of fraud.

Men are also more likely to be victims of fraud than women - current account fraud is split 70% men vs 30% women.

How to protect yourself from becoming a victim of fraud

There are several things you can do to avoid becoming a money mule target. The Don't Be Fooled campaign from Financial Fraud Action UK and Cifas suggest the following:

• Don't give your bank details to anyone you don't know or trust.
• Be wary of jobs where all interactions and transactions are done online.
• Be cautious of jobs offering easy money - if it sounds too good to be true, it probably is.
• Research any company that makes you a job offer and make sure their contact details are genuine.
• Be wary of overseas job offers, as it's more difficult to find out if they are legitimate.
• Be cautious of job ads that are written in poor English with grammatical errors and spelling mistakes.

Find out more: How to spot a social media scam

To protect your personal details from being used by criminals to open current accounts, Experian suggests:

• Always shred or destroy documents containing personal information before throwing them away.
• Never respond to calls or emails asking for account details, PIN numbers or personal information.
• Be careful what information you share on social media, particularly if pets' or children's names are used as passwords.
• Register to vote at your current address, otherwise criminals could use your previous address details to open new credit accounts.
• Monitor your post to see if any letters you were expecting are missing.
• Redirect mail via the Post Office if you move house.
• Use secure, unique passwords for your online accounts.
• Don't store account names or passwords on your smartphone.
• Read all bank and card statements to check for suspicious transactions.
• Check your credit report - all credit accounts and money you owe is listed, so you can check for applications that haven't been made by you.

Find out more: Best banks for dealing with bank fraud