The Scale and Nature of Fraud Report: lessons to be learned

The Government has recently published a report entitled: The Scale and Nature of Fraud: a review of the evidence. The authors, Laura Blakeborough and Sara Giro Correia, attempt to make sense of the statistics surrounding the reports made to Action Fraud.  There are a number of startling facts so far as business are concerned, as well as some surprising omissions.

The analysis concentrates on data collected between 2011, when Action Fraud commenced, and 2017.  The headline figures are that 649,770 reports were made in 2016-2017 compared to 474,403 in 2011-2012.  However, it is conceded by the authors that fraud is significantly under reported

In relation to business, most of the frauds reported are in the financial sector, mostly from industry body reports via Cifas and Financial Fraud Action, and the majority of those relate to payment/plastic card fraud.

Businesses tend not to report internal frauds.  Family run business and micro-businesses are less likely to report than larger organisations.  Reading into this there is clear benefit to be had by businesses having clear Anti-Corruption & Bribery and Anti-Tax Evasion policies and procedures in place.

Surprisingly relatively few reports (11%) come from the construction industry - this may be because fraud is either unreported or the reporting of cases is discouraged due to accepted industry practices.   The transportation and storage and the information and communication sectors are the most reported areas, accounting for 64% between them.  Insurance companies tend not to report frauds.

The report highlights that there is a lack of capacity across law enforcement to respond effectively; cyber tends to be low impact but high volume; there is a low level of reporting of cyber security breaches because issues need to be resolved quickly, and crucially, a significant proportion of frauds against business appear to be insider-enabled.

Outcomes have increased, partly because "no suspect identified" cases are considered an outcome.  Only 14% of fraud outcomes resulted in a charge or summons being issued.  However the conviction rate is high, at 87%.

It takes an average of 535 days from the offence being committed to the first listing at Court, although this could be skewed by a small number of large cases.  The average length of custodial sentences imposed was 19.2 months, although 58% of convictions resulted in non-custodial sentences in 2016.

Most of the frauds reported are of low value, just 5% being worth more than £2,500, and the data does not appear to capture many high value losses.  The report goes onto reveal that individual victims are more likely to be in the higher income brackets, in managerial or professional positions and aged between 25 and 54.

Fraud poses a real economic threat to businesses with reported losses in 2016 totalling £769 million. We are able to assist with urgent cyber security breaches, tracing the loss, investigating the cause and persons responsible for the breach and provide advice in relation to bringing private prosecutions against those responsible.

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