The House of Lords in the UK has released a grim assessment of the fight against fraud. In a bleak review of the current systems in place to prevent fraud, the report suggests six changes to improve the crime fighting institutions.
The report notes a dramatic increase in fraud during the covid era. While most other crimes have gone down, the UK Office for National Statistics reports an increase in fraud cases of 25% since the pre-pandemic year. The BBC reported that the total cost of this fraud is over £4 billion.
Online fraud is largely responsible for this rise, with 80% of reported frauds being cyber-enabled. New developments in payments have created more dangerous conditions for authorised push payment fraud, where a person or company voluntarily sends money to a fraudster they believe to be a genuine payee.
A key issue is that law enforcement agencies are both unable and unincentivized to invest in fraud fighting measures. They are severely underfunded and are more focused on other areas of crime. Also contributing to the ineffectiveness is the uncertainty about who is responsible for fighting fraud. The ‘alphabet soup’ of agencies adds ambiguity and hurts the efficiency of law enforcement.
To address these problems, the report suggests the following six changes:
- The UK’s advanced payments infrastructure is one of the key reasons why it has become a global centre for fraud. The speed with which payments can be made must be delayed in certain circumstances to allow more time for banks to review risk signals and contact their customer about the proposed payment. The Payment Systems Regulator should consult on measures to achieve this.
- To move fraud to its rightful place as a top priority for law enforcement, fraud should be included within the Strategic Policing Requirement.
- To address the mind-boggling variety of acronyms and alphabet soup of departments, taskforces and Ministers with responsibility for fraud, a cabinet sub-committee with a clear mandate to tackle fraud should be established, chaired by and accountable to the Security Minister.
- Several sectors involved in the fraud chain have failed to prevent rampant fraud for too long. The Government must introduce a new corporate criminal offence of ‘failure to prevent fraud’ across all sectors to address 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. It must be brought forward urgently.
- To create clear advice for consumers to follow to help them to prevent fraud and report it if they become a victim, the Government should oversee the introduction of a single, centrally funded consumer awareness campaign in partnership with industry.
While these changes are welcome, they are unlikely to be effective in the near future. The unfortunate reality is that instances of fraud are likely to remain high and law enforcement is unlikely to be able to stop it. Until these changes take effect, the best hope for recovery of losses is through private litigation.
If you’ve been defrauded or have any questions about fraud law, contact us at Duxton Hill- the only specialised law firm in Australia solely dedicated to pursuing claims for victims of fraud.
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