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A huge increase in fraud necessitates new plan
Fraud crimes now make up over 40% of all crime in England and Wales, according to a new report, published by gov.uk.
In 2022, total losses from fraud in England and Wales amounted to £4 billion, which is a 67% increase from 2021.
Despite the surge, current fraud teams make up just 2% of police resources. And, less than 1% of reported fraud cases have been prosecuted.
Taking action
The UK government has developed and published their new strategy in Fraud Strategy: Stopping Scams and Protecting the Public, May 2023.
“The publication of this strategy marks a fundamental shift in our approach to tackling fraud,” says Rt Hon Suella Braverman, KC MP, Home Secretary.
Indeed, the UK has reclassified fraud as a national security threat. The reclassification follows the 2022 Annual Report on Suspicious Activity Reports (SARs) by the National Crime Agency (NCA).
Published in January 2023, the report highlights that the past two years have been dominated by organized crime threats, particularly fraud, against members of the public, UK businesses, and government departments.
Time for change
The new strategy details how the government plans to aggressively address the problem of increasing fraud through three pillars. The first is to pursue fraudsters, the second is to block fraudsters, and third, to empower the public.
Included in the many actions outlined in the plan are:
Implementing a complete ban on all cold calls
The goal is to prevent fraudsters from duping people into buying fake investments. The law already applies to pensions. The new law applies to financial products more widely.
Launching a new National Fraud Squad
The team will be comprised of more than 400 new specialist investigators. Additionally, fraud will be a priority for the police and the UK Intelligence Community. Furthermore, the UK will lead a new global partnership to relentlessly pursue fraudsters wherever they are in the world.
Committing £100 million of new money
The funds will bolster law enforcement in the fight against fraud. This is part of a wider £400 million investment in tackling economic crime.
Replacing Action Fraud
The current fraud reporting system, Action Fraud, has been overwhelmed and under-resourced. It will be replaced with a state-of-the-art reporting system in 2024.
The new system will share data with the National Cyber Security Centre (NCSC) and the National Economic Crime Centre (NECC). Neither of these centres existed when Action Fraud was launched. The government also hopes to improve automation in the service, allowing more timely sharing of information.
How has fraud changed?
A major shift in the nature of how fraud is implemented is from unauthorised to authorised transactions.
Until recently, the main form of fraud was unauthorised fraud, which is predominantly bank and credit card related. In this form, money is taken from victims’ bank accounts without their authorisation or knowledge.
Banks improved their technologies to prevent unauthorised fraud, so the criminals are adapting as well.
Within the last two years there has been a significant swing towards authorised fraud. This is where victims are persuaded by the fraudster to authorise a payment themselves. Common examples include retail scams, romance, and investment fraud, among many other forms, according to gov.uk.
Increase in tech-driven fraud
As consumers and businesses adopt new digital technologies, so do criminals.
Discussing the proliferation of digital techniques for perpetrating fraud, Mark Steward of the Financial Conduct Authority (FCA) calls this the “single biggest change in the shape of fraud we have seen.”
Social engineering fraud
Jason Lane-Sellers of LexisNexis Risk Solutions describes social engineering as the fastest-growing threat.
In the past, scammers sent out mass emails or mass texts to people. Also, they put adverts in various types of mass media.
Now, in a social engineering scenario, criminals will buy personal data online, supplied through large-scale data breaches. Then, they conduct targeted personal communication using specific information about an individual.
They manipulate their victim by presenting themselves as a bank, for example, or a tax authority.
Using the obtained data, they can subsequently reference a purchase made on a specific date, using a specific account, for a particular item. At the same time, they can ‘validate’ that a payment was made from a bank account. They create trust by giving correct details that are genuine.
Then, victims are told that their account has been compromised. For safety, their money needs to be moved to another account, which is provided. They are told to never give out their login or password, but to manage their own transaction.
A victim then authorizes the transaction because they trust the caller.
Targeting youth
Often, older generations are thought to be the biggest targets of scammers. However, with more of the fraudsters operating online, it’s easy to see why younger generations – who live their lives online – are being targeted as well.
To be sure, it is not for their money, rather, it is for their naïveté about money.
Accordingly, new research reveals:
- 39% of young adults have been targeted by potentially sinister job ads on social media.
- 87% are open to opportunities to make additional cash.
- 78% of young Brits do not know what ‘money muling’ is.
Money muling
This scam is presented to young adults, students, and job seekers as a job opportunity. Chiefly, they are promised big money for easy work.
The ‘employer’ asks them to do transfers between accounts, while they keep a small amount of ‘commission’ for themselves.
The transfers might be made through bank accounts, cashier’s checks, virtual currency, prepaid debit cards, or money service businesses.
Aside from employment offers, people on dating websites are also often targeted because they’ve established a trusting or romantic relationship with the individual who is asking for help.
Criminals recruit money mules in order to help launder proceeds derived from online scams or crimes like human trafficking and drug trafficking.
Unfortunately, laundering the profits of any criminal activity is illegal, even if there was no knowledge of how the money was obtained.
Prioritising the fraud threat
Because of its new classification, the armed forces will be required to treat fraud as a top priority alongside public disorder, serious and organized crime, civil emergencies, cyber-attacks, and child sexual abuse.
Biggest tipoff
Lane-Sellers advises that there is one crucial giveaway of a fraud-in-progress, “Notice if they’re asking you to do a transaction that you don’t normally do, in a way you don’t normally use.”
See also:
Financial Scams Rise as People Aim to Prop Up Retirement Funds
Retirement Planning: Consider Cash Flow in Addition to Accumulation
Aisa International, s.r.o. is a wealth management firm with an award-winning team who provides investment advice, financial planning, and asset management for U.S., U.K., and E.U. expatriate citizens residing abroad. Holding all current regulatory licenses, including the FCA license in the UK and the Investment Licence in the European Union, Aisa International is uniquely qualified to provide personal financial advice for U.K. pensioners living outside of the U.K. Headquartered in Prague, Czech Republic, Aisa International serves its global clients where they reside through its OpesFidelio network of highly-qualified advisors. For more information, please visit www.asiainternational.cz.
The views expressed in this article are not to be construed as personal advice. Therefore, you should contact a qualified, and ideally, regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. Consequently, if you do not, then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Importantly, where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
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