The Government must take the fight to the fraudsters by slowing down faster payments and prosecuting corporates for failure to prevent fraud

The UK is one of the most lucrative markets in the world for organised criminals. Billions are lost to fraud every year and an adult in England and Wales is more likely to become a victim of fraud than any other individual type of crime.

Fraudsters have no regard for the devastating financial and emotional impact that their crimes have on victims. They operate without fear of facing justice and the money they make is often funnelled into untraceable cryptoassets or used to fund further criminal activity. Yet the companies who allow these organised criminals to defraud people using their platforms do far too little to prevent the ruthless exploitation of their services. They all contribute to a ‘fraud chain’ often starting with a phishing message and finishing with the cashing out of stolen money.

These are among the findings of a new report, ‘Fighting Fraud: Breaking the Chain’, published today by the cross-party Fraud Act 2006 and Digital Fraud Committee. This special inquiry committee was appointed in January 2022 to consider the rise in digital fraud.

The committee spoke to a range of witnesses including victims of fraud. It took evidence from Joe Lycett, comedian and presenter of the Channel 4 consumer programme, ‘Joe Lycett’s Got Your Back’, who said that “anyone can be caught out by it, and it can completely ruin your life”. It also heard from Chair of the Bar, Mark Fenhalls KC, who argued that “the state has retreated from the investigation and prosecution of fraud over the last 15 years”.

The report makes six key recommendations to the Government to break the fraud chain:

Tackling fraud is the responsibility of too many government departments, agencies and ministers. This has led to a lack of accountability and inefficient policymaking. The Government needs to establish a Cabinet sub-committee with a clear mandate to tackle fraud, chaired by and accountable to the Security Minister.

Fraud makes up 41% of all crime against individuals, but at the moment only 1% of law enforcement is focussed on tackling economic crime. The way that fraud is policed is ineffective, and agencies lack the digital skills to properly tackle digital crime. Fraud should be written into the Strategic Policing Requirement, which sets out the top priorities that the police must focus on.

Several sectors are involved in the fraud chain, but they do not all face the same incentives to tackle the problem. Until all fraud-enabling industries fear significant financial, legal and reputational risk, they will not act. A new corporate criminal offence of ‘failure to prevent fraud’ should be introduced, applicable across all sectors, accompanied by significant financial penalties.

There is no single, national campaign to raise awareness about how to protect yourself against fraud, and how to report it if it happens. The Government should introduce a single, centrally funded consumer awareness campaign in partnership with industry to remedy this.

The Online Safety Bill contains several important measures to prevent fraudulent content and scam advertising from appearing on online platforms and to hold tech companies accountable when they fail. The Online Safety Bill must be brought to parliament urgently.

The UK has one of the most advanced digital banking systems in the world. While this is great for businesses and consumers, it makes the UK a lucrative market for fraudsters who want to quickly cash out stolen funds. A delay lasting no more than several hours on certain high-risk payments should be introduced. This would give banks more time to analyse whether a payment might be fraudulent.

Baroness Morgan of Cotes, Chair of the Fraud Act 2006 and Digital Fraud Committee, said:

“Fraud is the most commonly experienced crime in our country and everyone is vulnerable to it. We heard some heart-wrenching stories of how people had become victims of these crimes and the indelible marks that had been left on their lives. Some will never recover from the financial and emotional harm.

“Fraud costs victims billions in losses, yet it is under-resourced, under-prioritised, and its impact is widely under-estimated. If this were any other type of crime, we would deal with it swiftly and the perpetrators would be brought to justice. Because most fraud happens online, it remains invisible and fraudsters walk away without fear of repercussions.

“The Government can’t keep on sticking its head in the sand and hoping this problem will go away. It must act. Creating a Cabinet sub-committee would send a message to criminals that it takes fraud seriously. Law enforcement must prioritise fraud and we must slow down payments to give banks more time to analyse suspicious transactions.

“But payments are the last link in the fraud chain. Until all fraud-enabling industries including tech and telecoms companies fear significant financial, legal and reputational risk through new corporate criminal offences, we will never break the chain.”