Fraud Costs the UK More Than £38bn, Says NFA

The National Fraud Authority (NFA) has published its second Annual Fraud Indicator (AFI), which estimates fraud is costing the UK over £38bn a year. The new estimate and comprehensive data breakdown is testament to improved methodologies and co-operation across government and industry. It also shows the real impact fraud has on individuals, businesses and government.

Loss estimates to fraud by sector:

  • Public £21bn.
  • Private £12bn.
  • Individuals £4bn.
  • Charity £1.3bn.

The public sector remains the highest proportion of the fraud loss at £21bn – 55% of the total figure. This estimate, for the first time, includes new and more accurate figures for procurement (£2.4bn) and grant fraud (£515m).

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. It is also important to note that this figure represents a relatively small percentage when taken in context of the public sector’s overall spending and income.

A better understanding of fraud in the public sector has led to the Cabinet Office setting up a cross-government Counter-fraud Taskforce which is overseeing a number of pilots to develop and establish counter fraud techniques that can be rolled out across the public sector. In addition to this, the NFA is progressing 15 different projects, many of which form a part of the Taskforce work, to help central and local government cut key fraud risks and deliver savings.

Collaboration with the charity sector has enabled the NFA, for the first time, to provide an accurate estimate of the level of fraud within this sector. The £1.3bn figure was identified in a survey the NFA conducted gauging how fraud affects the sector, to which over 1,000 charities responded. This estimate represents around 2.4% of the total charity sector turnover. The NFA and the Charity Commission are working closely together on a number of counter-fraud prevention initiatives to encourage charities to build improved fraud prevention measures into their operations and to develop a stronger counter fraud culture in this sector.

Private sector fraud losses of £12bn make up 31% of the total annual figure. The financial services industry recorded the highest loss to fraudsters at £3.6bn. This is a slight decrease on the 2010 AFI figure of £3.8bn due to improved fraud prevention methods involving plastic card (£440m) and cheque fraud (£30m). Online banking, however, has seen an increase of 14% (£60m). The sector continues to invest heavily in counter fraud systems and solutions to help stay one step head of the criminals.

Mortgage fraud (£1bn) and insurance fraud (£2.1bn) remain high.

A new inclusion in the AFI is fraud losses to small and medium-sized enterprises (SMEs) at £780m. The NFA and the Federation of Small Businesses (FSB) worked together to produce this estimate. It is hoped that raising awareness of the scale of loss will spur new fraud prevention initiatives in this sector.

Individual citizens’ losses equated to 10% of the overall fraud figure (£4bn), 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 (£3.5bn) 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 £93m lost by individuals over the past 12 months to fraudsters.

The NFA and law enforcement are working together to build increased capacity for disruption of criminal attacks against individuals, as well as better intelligence sharing and analytics to support enforcement action. Cross-government and industry work also continues to increase public awareness of fraud and how to protect against it.

Dr Bernard Herdan, chief executive officer (CEO) of the NFA, said: “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.”


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