The fight against fraud: why is the UK so lax?

The UK is belea­guered by fraud – and the prob­lem shows no signs of abat­ing, as crim­i­nals exploit our vul­ner­a­bil­i­ties.

In its Annu­al Fraud Report 2022 UK Finance, which rep­re­sents the bank­ing and finance indus­try, called for greater cross-sec­tor action to tack­le the issue as fraud­sters become increas­ing­ly skilled at adapt­ing their meth­ods to suit changes in con­sumer lifestyles and behav­iour. 

A key con­cern is the rise of imper­son­ation scams and autho­rised push pay­ment (APP) fraud, when a pay­er is deceived or defraud­ed into autho­ris­ing a pay­ment to a crim­i­nal. UK Finance mem­bers report­ed 195,996 inci­dents of APP scams in 2021 with gross loss­es of £583.2m, com­pared with £420.7m in 2020. Of the total, £505.8m relat­ed to per­son­al loss­es and £77.4m affect­ed non-per­son­al or busi­ness trans­ac­tions.

It is clear the prob­lem is wide­spread. Last year, com­mu­ni­ca­tions reg­u­la­tor Ofcom found that eight out of 10 peo­ple sur­veyed had been tar­get­ed with scam texts or phone calls designed to con­vince them that they were from trust­ed organ­i­sa­tions such as banks, the NHS or gov­ern­ment depart­ments. 

“Fraud has been the most com­mon form of crime for sev­er­al years and the threat con­tin­ues to evolve and diver­si­fy,” says Mike Miller, eco­nom­ic crime man­ag­er at ICAEW. “Tech­no­log­i­cal advance­ments and geopo­lit­i­cal shifts pro­vide the back­drop for nefar­i­ous actors – be they nation states, organ­ised crim­i­nal groups or pet­ty crim­i­nals – to diver­si­fy their tar­gets and meth­ods of attack. 

“Mobile tech­nol­o­gy makes it eas­i­er for crim­i­nals to tar­get vic­tims direct­ly, through var­i­ous com­mu­ni­ca­tion meth­ods. And the government’s Covid finan­cial sup­port pack­ages have pre­sent­ed more oppor­tu­ni­ties for fraud­u­lent claims such as fur­lough pay­ments.”

APP fraud often involves social engi­neer­ing – scam texts, phone calls and emails – and with the move towards buy­ing online, which ramped up dur­ing the pan­dem­ic, the oppor­tu­ni­ties for crim­i­nals abound. Fake web­sites and adverts fea­tur­ing celebri­ties have been used by many unscrupu­lous types to encour­age con­sumers to hand over per­son­al details – and cash.

Peter Tay­lor is a fraud con­sul­tant and for­mer CID fraud offi­cer. He says that fraud has long been embed­ded in the UK and is habit­u­al­ly dis­missed as vic­tim­less. But the dev­as­ta­tion wreaked by fraud­sters should not be under­es­ti­mat­ed. The crime, which manip­u­lates human curios­i­ty and our propen­si­ty to engage with oth­ers, can dam­age vic­tims’ men­tal and phys­i­cal health. Age UK says that old­er vic­tims are 2.4 times more like­ly to die or go into a care home than peo­ple who are not scammed.

“Crim­i­nals are crea­tures of habit and if they make mon­ey they will keep com­ing back,” says Tay­lor. “The dis­rup­tion from Covid and the funds avail­able accel­er­at­ed the growth of fraud – so it’s hard­ly sur­pris­ing we are at the front of the queue when it comes to com­mit­ting and being vic­tims of fraud. We also have large net­works of UK-based organ­ised crime groups who have added fraud to their port­fo­lio. When we add to that the fact that there is so much dig­i­tal access to peo­ple in the UK, Eng­lish being the most spo­ken lan­guage in the world, and a lack of arrests, we are an attrac­tive prospect glob­al­ly.”

Fraud is so rife that the Nation­al Crime Agency describes it as the most com­mon crime in the UK, cost­ing many bil­lions of pounds every year – and it’s thought the crime is under-report­ed, so the prob­lem is like­ly to be far worse than offi­cial fig­ures state. And as well as the per­son­al loss­es suf­fered by vul­ner­a­ble vic­tims, duped busi­ness­es may col­lapse.

Stoy­an Bar­rett, spe­cial­ist crime oper­a­tions inves­ti­ga­tor and cyber­se­cu­ri­ty expert, notes that small­er busi­ness­es are increas­ing­ly inter­est­ing tar­gets for would-be attack­ers who know that many firms sim­ply don’t think they’ll be tar­get­ed.

“How might you deal with a sys­tem lock­down, a ran­somware attack, fol­lowed by a request for £20,000 to unlock your busi­ness? Savvy up: tech is valu­able so let’s treat it as such,” he warns. “If an SME does not pri­ori­tise cyber­se­cu­ri­ty as a fun­da­men­tal, then sad­ly when they fall vic­tim it is not dif­fi­cult to see why so many are unable to recov­er … we should now be tar­get­ing cyber­crime and cyber­se­cu­ri­ty in much the same man­ner as smok­ing, as it rep­re­sents the largest threat to our econ­o­my.”

To try to address the prob­lem, UK Finance heads up the Take Five to Stop Fraud cam­paign to raise aware­ness to help con­sumers and busi­ness­es to pro­tect them­selves. It encour­ages peo­ple to stop and think before part­ing with mon­ey or infor­ma­tion; to chal­lenge – stress­ing that it’s ok to reject, refuse or ignore any requests, and to pro­tect – con­tact your bank imme­di­ate­ly if you think you’ve fall­en for a scam.

But while pre­ven­tion is a com­mon-sense approach, some experts believe a sin­gle body should be in place to com­bat fraud, rather than the cur­rent piece­meal approach that sees dozens of bod­ies pitch­ing in and relies on poten­tial vic­tims to be astute. 

“Almost all the reg­u­la­tions to tack­le fraud are poor­ly enforced and place the bur­den of detec­tion on the com­pa­nies on the front lines. That would work well if over­sight by reg­u­la­tors was more than cur­so­ry – which is large­ly due to lack of resourc­ing,” says secu­ri­ty con­sul­tant James Bore.

“The num­ber of bod­ies respon­si­ble for tack­ling fraud needs to be sim­pli­fied. It’s no longer a region­al issue, so it makes lit­tle sense to have region­al police author­i­ties respon­si­ble for fraud. And beyond that, there are mul­ti­ple bod­ies act­ing on eco­nom­ic crime. Cen­tral­is­ing these into a sin­gle, well-resourced agency with a sin­gle pur­pose would make a world of difference.”It is per­haps a sign of the times that even the likes of UK Fraud and the Nation­al Crime Agency, among oth­er offi­cial organ­i­sa­tions, warn web­site vis­i­tors that fraud­sters imper­son­ate them – mak­ing it yet more dif­fi­cult to know who to trust.