Briefing: Industry scratching its head over deepfake e-scooter fraud

By Editor Katie Scott

There’s no doubt about it – e-scooter popularity is fast accelerating.

Figures published by Transport for London in February 2022 found that in the prior eight months, 585,000 e-scooter trips were conducted via the capital’s trial with e-scooter operators Dott, Lime and Tier.

During this reporting period, around 180,000 people took advantage of the e-scooter scheme operating in London.

The continued success of the UK government’s e-scooter trials has not gone unnoticed, with former minister of state for the Department for Transport Trudy Harrison confirming in July 2022 that the 30 government-approved rental e-scooter trials across the UK would be extended to run until May 2024, as reported by Move Electric.

The e-scooter trials initially kicked off in July 2020, with an end date of November 2021 pencilled in. The trials were subsequently extended in May 2021 to finish in March 2022 and then pushed back again in May 2022 to conclude in November 2022.

These extensions aimed to provide the Department for Transport with additional time to establish best practice around micromobility services and to obtain more data.

Speaking at September’s Fraud Charter roundtable, hosted by Insurance Times and sponsored by Carpenters Group, Simon Smith, director of claims strategy at Carpenters Group, explained that over the last eight months, e-scooter usage within the UK’s trials has grown by 170% as a result of the British summer weather.

In particular, e-scooter usage in Birmingham was boosted by 80% due to the city hosting the Commonwealth Games at the end of July – this equated to 66,000 journeys, Smith said.

He believes an additional eight locations could join the trial programme now the scheme has been extended, meaning that e-scooter usage is “only going one way and that is most definitely up”.

Other drivers of increased e-scooter usage include Southampton City Council agreeing to provide “permanent access to cycle lanes for e-scooters”, as well as retailers such as Currys selling private e-scooters.

He explained: “Currys has started selling e-scooters and will be launching a specific e-scooter advert proposition in the run up to Christmas. [It is] going to be carrying e-scooters manufactured by Honda and Toyota in 2023.”

Deepfake fraud

Although e-scooters boast a myriad of benefits linked to the transition to a net zero carbon emissions economy, Smith raised concerns to roundtable attendees about new types of fraud that are now gaining traction.

For example, he said Carpenters Group has seen its “first case of a facial ID deepfake, which has been used to access an e-scooter”.

Deepfakes refer to synthetic media where a person in an existing image or video is replaced with someone else’s likeness.

In the context of e-scooters, therefore, deepfakers have “circumnavigated an Apple iPhone check and a validation on the scooter itself”, Smith explained.

However, he wondered what the “end game” of this type of fraud actually is and urged fellow attendees to remain vigilant.

He continued: “I do wonder from a fraud perspective what the end game there is. If we’re seeing people that are already changing facial recognition software on e-scooters and iPhones, there’s got to be a serious game for that amount of effort be involved.”

Smith has additionally seen “some small reports of debit and credit card fraud” linked to e-scooters.

He explained: “We’ve got a particular instance where we’ve got one rider, with one card who is simultaneously riding 17 e-scooters in one particular borough at the moment. I’m sure we’ll see more of that.”

There is also the risk of exaggerated claims too, Smith added.

“We’ve had claims in for £500 to £600 trainers that have been damaged as feet have been [run over by e-scooters] in certain cities. There’s also damage to handbags and leather good items,” he noted.

“It’s certainly starting to creep in and I think we’ll see more of it as the volume [of e-scooter usage] increases as well.”

Safety first

The crux of claims, however, could lie in the simple fact that many individuals who hire an e-scooter don’t actually know how to ride them.

This becomes even more pertinent if Brits buy their own private e-scooters because “the speed can be easily overridden” on these vehicles, making them “a danger to the public”, according to Laura Horrocks, director and head of fraud technology and intelligence at loss adjusting firm Sedgwick.

She explained: “[For] the general public, there isn’t really an understanding of how to ride them correctly. So, most people don’t know how to start an e-scooter.

“While the speed is restricted on the legal vehicles that are part of the trial, there are lots and lots of vehicles now that people can go and buy privately - which I think most people are aware that they shouldn’t be ridden on public roads, but they clearly are. And the speed can be easily overridden on those e-scooters, so they can be a danger to the public.

“There is lots of evidence of people under the age of 18 using them, pillion passengers riding them on pavements and where they are not supposed to be used.”

For her, more needs to be done within the UK’s trial to promote “how the vehicle should be used safely and effectively”.

She continued: “I’m aware it will be in the terms and conditions, but in all likelihood, people won’t be reading those terms and conditions very thoroughly, especially if they’re using someone else’s ID to obtain the e-scooter.”

Mindful of future claims

Smith added that there are numerous risks the insurance industry will need to keep an eye on when it comes to claims arising from growing e-scooter usage – as well as potential fraud.

He said: “What’s fascinating is the demographics across the e-scooter rental markets at the moment is a significant proportion of 16-year-olds because you only need a provisional licence to be able to jump on [an] e-scooter. And you wonder what education has taken place there. Also, 16-year-olds with access to debit or credit cards - I’m not too sure where those two marry off at the moment.

“We are certainly going to see more problems [around] illegal scooters - there’s a view that [there] is potentially as many as a million e-scooters now in the UK that are privately held and the majority of those scooters have come in on the grey import market from China.

“There are also big concerns now about [the] lithium battery packs in e-scooters. [For example,] there is a massive claim with [Transport for London] underway at the moment which is where a private e-scooter exploded - the lithium battery component parts exploded on the Northern line and it set light to the carriage.”

E-scooters are likely to be a permanent part of the UK’s micromobility infrastructure and their popularity with Brits is only increasing – if the trial findings to date are anything to go by.

However, as individuals become more versed in e-scooter usage and more confident in hiring and buying these vehicles, it does also open the door to new types of claims and fraud that will need to be on the insurance industry’s radar.

I’m sure trends around e-scooters will remain a hot topic on the Fraud Charter agenda for quite a while.