UK called to lead ‘cross-border war’ on fraud amid £420bn crisis

By Gloria Methri

One in five adults (21%) has fallen victim to fraud in the last three years, according to a report by the Social Market Foundation (SMF), commissioned by Santander UK.

Over 10 million individuals in the UK alone have been affected, collectively losing more than £9 billion, with an average loss of £907 each. This alarming trend, described as a “fraudemic,” necessitates immediate action.

The SMF’s report, “It’s a Fraudster’s World,” provides insight into the global nature of fraud, backed by survey data from 15 countries and 28,000 respondents.

Key findings

– Over a fifth (21%) of respondents across 15 countries reported having experienced fraud, with £168 billion falling into the hands of fraudsters. When including wider social costs—like the loss in productivity from having to deal with the aftermath of fraud—the 15 economies suffered a total of over £420 billion worth of damages.

– Beyond the financial loss, 40% of respondents reported feeling less trusting of others after being targeted, and one in ten (12%) reduced their use of the internet and communication technology as a result.

– In the UK, the SMF estimates that 10 million Britons fell victim to fraud between 2021 and 2023, costing the broader economy around £16 billion. The average loss for Britons was £907, with a third (33%) reporting suffering a negative emotional impact and 18% an impact on their finances.

– Across the countries polled, there was public recognition that – alongside banks and other payment service providers (94%) – other parts of the ‘fraud chain’ including digital platforms (88%) and telecoms and internet providers (84%) have a responsibility for compensating fraud victims for their losses.

International coordination on counter-fraud efforts is desperately needed, given fraudsters’ ability to act across global boundaries to claim British victims. Experts that SMF spoke to highlighted the problem this causes for UK law enforcement, which is constrained by geography and the costs of trying to navigate the various international arrangements for law enforcement.

Recommendations for the UK Government

To effectively combat the rising tide of fraud, the SMF urges the UK Government to adopt the following strategies:

Push for an International Agreement: The government should advocate for a comprehensive international agreement to enhance cooperation in fraud prevention and invest more resources in combating this issue.

Establish a Cross-Departmental Economic Crime Leadership Group: A dedicated group should be formed to prioritise the fight against fraud and ensure a coordinated response across various government departments.

Boost Law Enforcement Capabilities: Enhancing the resources and capabilities of law enforcement agencies to tackle economic crime is essential.

Implement Legal Duties for the Private Sector: Organisations within the ‘fraud chain’ should be held to legal obligations to prioritise fraud prevention and assume relevant costs.

Sustain the ‘Stop! Think Fraud Campaign’: Long-term funding is necessary to maintain public awareness initiatives over the next five years aimed at preventing scams.

Support Anti-Fraud Efforts in Developing Countries: It is crucial to increase assistance for low—and middle-income countries to enhance their anti-fraud law enforcement and regulatory capabilities.

Stephen White, Chief Operating Officer at Santander UK, said, “The report puts to paper the sheer scale of the fraudemic that we’re seeing. Despite the best efforts of banks and policymakers, the criminal gangs who sit behind fraud are enriching themselves to the tune of billions and costing the global economy hundreds of billions. Fraud has become a global phenomenon, as such it needs global, collective action. The UK is in a prime position to lead this charge. Still, we need renewed focus on tackling the fraudemic across Government, banks, and the global technology and communication companies that connect criminals with potential victims.”

Richard Hyde, Senior Researcher at Social Market Foundation, added, “Our research presents the most precise picture yet of the scale of the global problem. It is not just the UK that is besieged by fraudsters – both developed and developing countries face substantial fraud challenges.

“Any nation acting alone remains ill-equipped to deal with today’s fraudsters, who can operate from anywhere and claim a victim thousands of miles away. To tackle the challenge, governments across the world need to coordinate and put in place strong counter-fraud measures at home; this will create the best platform from which the world can deal with cross-border fraud. We believe that the UK can and should facilitate and lead that global movement”.