Rail fraud in the UK to be tackled

British train operating companies estimate that 10%-30% of the compensation claims they pay out are fraudulent, leading to millions of pounds of financial losses. To what extent is this issue impacting the industry, and how can technology help to simplify the process of identifying fraudulent activity?

The demand for rail has increased faster than other transport modes over two decades. According to a report from the UK Department for Transport, the number of journeys has increased by more than 50% over the last 20 years where other methods of transport, such as bus and automobile, have decreased over the same time.

Statistics from the Office of Road and Rail, considering all railway lines in 2018-2019, show that there were 1.8 billion passenger journeys.

But as rail travel has increased in demand, so have the number of delays. Overall only 87.7% of UK rail journeys arrived on time in 2018 to 2019, and fraudulent claims, which exploit the systems in place to compensate passengers for train disruptions, have also risen. When passengers are delayed more than 15 minutes, they are eligible to apply for compensation through Delay Repay, as long as the problem is not due to engineering works, and the claim is made within 28 days of the journey.

In July 2019, London North East Railway (LNER) discovered that just one person had been behind a series of 125 claims under the national Delay Repay scheme. It was discovered after a fraud protection manager noticed a sharp rise in the number of claims made by PayPal.

At the same time, according to independent transport watchdog Transport Focus estimates that “only 35% of rail passengers are claiming money they are due for delayed train services” and “missing out on up to £100m a year that they could claim in compensation”. The reason many do not claim for a refund is that if the ticket price is low and the length of the delay is short, the long and complicated application process for compensation is considered “not worth the effort.” All of it contributed to negative opinions about the system.

Along with the efforts to improve the claims process, rail fraud technology firm UP3 had to pay close attention to the security, to not expose the rail companies to even higher risk of fraud. As a solution, UP3’s software, AP3, uses 20 elements which they claim can identify around 80% of fraudulent activity. The application includes a Journey Validator, which immediately confirms if the journey was delayed or not, and can compare an individual’s claims against consumer journey patterns and the distance to their home from the station.

- 28 January 2020 - EN