Fraud strategy ‘simply not adequate’ to address current scale of economic crime, says law firm

The Government’s fraud strategy published on Wednesday (May 3) includes plans for a new elite team of specialist investigators.

The new National Fraud Squad will overhaul how these crimes are investigated by taking a proactive, intelligence-led approach, backed by 400 new specialist investigators.

It will work with local forces, international partners and the UK intelligence community “to ensure that callous fraud cells who target millions of Brits each day are shut down”, the Government said.

However, Louise Hodges, head of the Criminal Litigation practice at law firm Kingsley Napley, said: “As can be seen from the findings of the Economic Crime Survey 2020, fraud is a big problem, and one which has been exacerbated by years of under-investment.”

“Unfortunately, this fraud strategy, which puts forward a few hundred specialist investigators to tackle 40 per cent of all recorded crime, will simply not be adequate to address the current scale of economic crime.”

She added: “The strategy includes a new independent review into the challenges of investigating and prosecuting fraud covering a range of topics.

“Although carrying out a review of the lifecycle of a fraud case from initial report to disposal may highlight some key issues, many of the challenges have been very well known for a long time and discussed ad-nauseam.

“This review should not be a reason to introduce delay or an excuse to kick the can down the road again.”

Fraud is now the most common crime in the UK, with one in 15 people falling victim, costing nearly £7 billion a year. With developments in modern technology opening up new avenues for criminals to target victims, nine in ten internet users have also encountered online scams.

New measures included in the fraud strategy will close the routes that scammers use to target victims, including by banning cold calls on all financial products – such as types of insurance or sham crypto currency schemes – and working with Ofcom to use new technology to further clamp down on ‘number spoofing’, so fraudsters cannot impersonate legitimate UK phone numbers.

The Government will also ban other devices or methods commonly harnessed by scammers to reach thousands of people at once, such as so-called ‘SIM farms’, and review the use of mass texting services to keep these technologies out of the hands of criminals.

A new system replacing the current Action Fraud service is also expected to be up and running within the year.

Backed by a £30 million investment, it will provide a simpler route for reporting fraud online, with reduced waiting times and an online portal to allow victims to get timely updates on the progress of their case.

“This improved service will also ensure victims’ reports are acted upon more effectively, using data to ensure we can continue to build intelligence as criminals continue to find new ways to target victims,” the Government said.

Commenting on the measures outlined in the fraud strategy, Alun Milford, Criminal Litigation partner at Kingsley Napley, said: “There is an understandable focus in the new fraud strategy on protecting consumers and the general public from the scourge of cold calls and scam texts as well as banking fraud.

“As one would expect, the Government intends to draw on the resources of the National Crime Agency and City of London Police in attempting to do this.

“But whilst there is plainly a place for central support, the problem is too wide for a centralised approach – this needs teamwork in the system.

“Any kind of sensible response to the fraud epidemic is a national network of properly-funded, skilled investigators and prosecutors, and a functioning court system.”

The Economic Crime Survey 2020, also published on Wednesday, shows that around one in five businesses had been a victim of fraud in the three years prior to the survey (18 per cent).

The incidence rate (number of incidents) was 3,917 per 1,000 businesses. The survey said this suggests “high levels of repeat victimisation”, with 46 per cent of businesses that experienced fraud experiencing more than one incident.

Businesses in the financial and insurance services sector were the most likely to have experienced at least one incident of fraud (21 per cent), while those in the information and communication (15 per cent) and legal services (12 per cent) sectors were the least likely.

The most common types of fraud experienced by businesses were debit or credit card fraud (47 per cent), followed by online banking fraud (17 per cent), and procurement-related fraud (16 per cent).

Fraud offences were often conducted remotely and 43 per cent of businesses were unable to identify the perpetrator, while a further 27 per cent said that the offender was impersonating another person or business.

The mean annual cost per business of all fraud incidents was around £16,000.