Joel Muckett 13 Nov 2017 12:47pm

UK loses £190bn due to fraud

Fraudulent activity costs the UK £190bn annually, which is equal to £7,200 per household and more than the GDP of 148 countries

The private sector was the worst affected by fraud, with the economy taking a £140bn hit, according to research by The Annual Fraud Indicator (AFI) 2017.

Additionally, fraud within the public sector cost the nation £40.3bn, while charities lost £2.3bn and fraud targeting individuals amounted to £6.8bn.

The research, conducted by Crowe Clark Whitehill, Experian and University of Portsmouth’s Centre for Counter Fraud Studies, showed a “significant proportion” of costs to the private sector came from procurement fraud.

It suggested that the private sector had been worst hit because procurement accounted for a large portion of organisational expenditure, which was often conducted by private enterprises.

Technology has opened up “new avenues” for fraudsters, with online banking fraud increasing by 226% and telephone banking fraud by 178% over the past year.

Crowe Clark Whitehill head of forensics and counter fraud Jim Gee said the total cost of fraudulent activities to British companies was as “clear” as other business costs.

“Private companies are made less stable and financially healthy; as citizens we don’t get the quality of public services that we pay our taxes to receive; and even charities don’t get to spend the full value of the donations which people make,” said Gee.

“What other problem of this size doesn’t have a proper national response?”

Despite the increased awareness for the dangers of fraud, Experian’s director of fraud and identity solutions Nick Mothershaw called the £190bn total cost “startlingly high”.

“Plastic card and online banking fraud continues to increase, so new regulations which make it harder for fraudsters to use someone’s cards online are a necessary step,” he said.

Mothershaw warned of fraudsters turning their attention to pension as a result of being “lured by the promise of high value returns” upon a successful scam.

“The 2017 Annual Fraud Indicator highlights again the colossal cost of fraud to the UK economy,” said professor Mark Button, director of the University of Portsmouth’s Centre for Counter Fraud Studies.

“At £190bn it would represent more than the UK government spends on health and defence combined, or on all welfare payments, bar pensions.”

Earlier this year, a survey by the Office of National Statistics found that fraud was the most common crime in England and Wales.

This revelation came after cybercrime and fraud were included in the Crime Survey for England Wales for the first time.

Last week, the Serious Fraud Office announced that they had doubled the amount of fraud suspects having their assets frozen, having imposed eight ‘restraint’ orders between 2016 and 2017.