New National Fraud Authority figures indicates fraud is growing, but private sector losses make up 31% of the total annual figure
New National Fraud Authority figures indicates fraud is growing, but private sector losses make up 31% of the total annual figure
The National Fraud Authority (NFA) published its second Annual Fraud Indicator (AFI), which has estimated that fraud is costing the UK over £38 billion a year.
Published today, the AFI’s new estimate and data breakdown is designed to better demonstrate the impact of fraud on consumers, and the public and private sectors.
Private sector fraud losses of £12 billion make up 31% of the total annual figure.
The financial services industry recorded the highest loss to fraudsters at £3.6 billion. This was a slight decrease on the 2010 AFI figure of £3.8 billion due to improved fraud prevention methods involving plastic card (£440 million) and cheque fraud (£30 million).
Online services attract fraud
Online banking, however, has seen an increase of 14% (£60 million). The sector continues to invest heavily in counter fraud systems and solutions to help stay one step head of the criminals, according to the NFA. But mortgage fraud (£1 billion) and insurance fraud (£2.1 billion) remained high too.
Dr Bernard Herdan, chief executive of the NFA, stated: “Victims of fraud are found in all sections of society. Whether it is the public, private and charity sectors or as individual citizens, it is vital we join together to take action to stem the rising tide of fraud. The Annual Fraud Indicator is our blueprint. It enables us to gain a perspective and judge the scale of the problem and target our actions accordingly.”
A new AFI inclusion was fraud losses to small and midsized enterprises (SMEs) at £780 million. The NFA and the Federation of Small Businesses (FSB) worked together to produce this estimate – the first of its kind. It is hoped that raising awareness of the scale of loss will spur new fraud prevention initiatives in this sector.
Mike Cherry, Federation of Small Businesses policy chairman, said: "The FSB was pleased to collaborate with the NFA in capturing the cost of fraud to small businesses – around £2,800 per business, per year. These costs can hamper enterprise for small firms when, in fact, the government are looking to them for economic growth and job creation.”
Identifying lucrative targets
Individual citizens’ losses equated to 10% of the overall fraud figure (£4 billion), covering loss from mass-marketing fraud such as share sale, lottery and advanced fee frauds as well as newer frauds such as online ticketing and rental fraud.
This additional information along with data included from Action Fraud, the national fraud reporting centre run by the NFA, widened the scope of last year’s figure (£3.5 billion) to produce an increased figure within this AFI. Action Fraud saw over 70,000 contacts made by the public and 10,000 crimes reported totalling £93 million lost by individuals over the past 12 months to fraudsters.
The public sector remains the highest proportion of the fraud loss at £21 billion – 55% of the total figure, albeit a relatively small percentage of the public sector’s overall spending and income.
The report said the size of the public sector estimate is, in part, due to diligence in reporting fraud loss data, combined with more comprehensive measurement techniques than other sectors.
“Tackling fraud will not solely be achieved through more investigation, prosecution and punishment of fraudsters. The NFA is working with its partners to promote greater fraud awareness and self-protection, encourage organisations to adopt fraud-proof systems, enable fraud reporting and facilitate better sharing of intelligence on fraudsters. We want to develop a stronger counter fraud culture, which helps to disrupt fraudulent activity across the UK and globally.”
The overall £38 billion a year AFI estimate from the NFA breaks down as: public sector – £21 billion; private sector – £12 billion; individuals – £4 billion; and charity – £1.3 billion.
