Research by UKFraud.co.uk (www.ukfraud.co.uk) of over 50 UK and European Fraud consultants reveals an expectation from over 80% of those polled, that fraud will increase dramatically across the UK and the rest of Europe in 2012. The areas likely to be most affected include: insurance, merchants and retailers, telecoms, government departments and local authorities. The most common fraud activities are expected to be cybercrime, internal fraud, supply chain and procurement fraud. The only area where fraud is expected to remain stable or to fall is the credit card sector where recent aggressive anti-fraud measures have forced fraud levels to fall.

Unsurprisingly, the leading cause of the increase, highlighted by the research, is the current global economic outlook, as austerity bites deep into most European states alongside rising taxes and increasing unemployment. One of the more specific concerns in the UK, is the pressure on budgets of the state anti-fraud organisation the National Fraud Authority (NFA). Their own current estimate of UK fraud runs at £38bn, which is more than double the £13bn projection in 2008. Many commentators expect an even bigger rise in the new year, when the latest figures are announced. It has also become a major concern to some respondents that the NFA has had to fight for their budget since being brought under the wing of the Home Office. And whilst some feel that government departments lack the commercial anti-fraud expertise to drive the fight against fraud forwards, the research suggests that the existence of the NFA means that the UK is seen by some as conceptually ‘ahead of the game’ across Europe.
Bill Trueman
Bill Trueman

One of the fastest growth areas of fraud is expected to be internal fraud, as employees are put on notice of potential redundancy or those disgruntled long term members of staff whose career advancement is placed on hold by budget cuts. The other major growth area is expected to be global cybercrime, not least as the UK government is seen as attempting to tackle this recently with the launch of the UK Cyber-Crime Strategy last month.

Commenting on the research, one of those surveyed Malcolm Gardner, Managing Director of Visionary Network said, “Quite simply the unusual combination of circumstances has created the ideal environment for a ‘perfect storm’ for global fraud growth. 2012 could well be remembered as the year of fraud and corruption”.

Bill Trueman, CEO of UKFraud.co.uk was keen to stress that there are options for the more adaptive organisations to avoid the impact of fraud. He commented “At the moment the international and domestic picture of increasing fraud most closely resembles a tidal surge. It is likely that despite all the organisation and effort to combat fraud, that the currently unprecedented frequency and scale will brand 2012 as the year when fraud risk was at its most pernicious. Rather than waiting for macro-economic or pan-European policy to take effect, individual and organisations are best to prepare and strengthen their own individual defences quickly and increasingly more comprehensively.”

To help organisations prepare UKFraud.co.uk believes that the most useful steps that can be taken include:

    Ensure that your IT people understand the technical risks and they know how to protect your business from attacks, theft of customer information and infiltration. Customer details and payment details are the most ‘at risk’ data; and that access security is the most important to the police.

    Remember though that with the best systems in the world, one of the weakest points of vulnerability is always the people using the systems, as they can easily be mis-led or conned. Ensure that customers have strong advice and warnings of the dangers. Also make sure that staff cannot access sensitive areas of your systems without proper controls and whatever they do is stored and available for audit. Make sure, when recruiting, that the bad-eggs that can get into the fabric of organisations are properly screened out before you are at risk by employing them.

    Look at your processes for weaknesses. These include: paper that need not be used, access to unnecessary customer data, who can access what and why people may need to access such details. Ensure that people have what they need to do their jobs, but no more.

    Make sure that your anti-fraud efforts are not just ‘after the event’ investigation-led. Ensure that you set deterrents and prevention. You should consider deploying early detection processes, systems, solutions and technology and that when you see a problem you take action to fix it properly and permanently.

    And finally, if you employ a fraud specialist, make sure that they have the ability to take action and change the business for the better.

Those seeking more in-depth advice on fraud can write to UKFraud.co.uk’s helpdesk at [email protected]