Reported fraud more than doubled to £2.3bn in 2023, report finds

The value of reported UK fraud more than doubled last year to £2.3 billion, according to the latest report from accountancy and business advisory firm BDO.

Feb 19, 2024
By Paul Jacques

This was the second largest annual fraud value recorded by BDO in 20 years.

However, it warns that the true level of fraud is likely to be significantly higher, as some organisations choose not to report the frauds they suffer. The latest Crime Survey for England and Wales revealed that fewer than one in seven fraud offences are reported to the police.

BDO’s latest FraudTrack report found that the total number of reported cases rose by 18 per cent to a three-year high and the number of high value cases of more than £50 million increased by 60 per cent in 2023.

BDO says the factors behind the rise include the large increase in online scams, phishing and system breaches, and “huge spikes” in Authorised Push Payment (APP) transactions, when fraudsters trick the unwary into transferring money to them.

“One particularly concerning development is the rise in online fraud factories or cyberfraud centres, with reports of hundreds of thousands of individuals being trafficked to work for crime syndicates,” says BDO.

“The UN has recently estimated that such fraud factories are generating billions of dollars in revenue.”

Looking back at the ten-year trend of data, the report identifies that not only are the number of reported cases of fraud rising but the amounts involved are also getting bigger.

BDO warns that this trend is likely to continue as new fraud-enabling technology and artificial intelligence (AI) present new opportunities for fraudsters.

Kaley Crossthwaite, BDO forensic partner, said: “We are not surprised by this increase in reported fraud numbers which is consistent with the surge in frauds that our forensic investigations teams are seeing on the ground.

“Many people choose not to report fraud because of shame or embarrassment. Businesses are also reticent about coming forward because of fears around negative publicity, reputational damage, and a lack of faith that the authorities will take action.

“While we hope the introduction of the Government’s Online Fraud Charter will encourage the technology sector to narrow the opportunities for online fraud, the sad reality is that the fraudsters will be looking to stay one step ahead by exploiting new options such as AI.

“All businesses are at risk, and many need to take urgent action to bolster their defences against fraud and financial crime. The ‘failure to prevent fraud’ offence introduced by the Economic Crime and Corporate Transparency Act 2023 may just provide the extra incentive to do so.”

Responding to the report, Oz Alashe MBE, chief executive officer of cyber security specialists CybSafe, said: “The surge in reported cyber incidents in the UK last year is a reminder of how quickly the cybercrime landscape is evolving. Cybercriminals are constantly harnessing new technology to make execution easier and attacks more difficult to identify and combat. AI is no different.

“While the introduction of the Government’s Online Fraud Charter is a step in the right direction, it’s crucial that businesses create an open and honest security culture that promotes reporting cyber concerns without fear of reprisal.

“Good awareness and education will go a long way in protecting individuals and businesses against attacks, but if admission is likely to lead to punishment, they will do little to protect an organisation from a workforce unwilling to put their heads above the parapet.

“An environment where people feel safe to report incidents without fear of stigma or consequences will not only help in shedding light on gaps in a business’s cybersecurity shield but also further strengthen defences against future crimes.”

BDO’s annual FraudTrack report, first published in 2003, analyses data from all UK fraud cases reported in the media with a monetary value of £50,000 and over.

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