Fraud costs the UK nearly £7billion a year. Viewed another way, it has been reported that 1 in 15 people are falling victim to fraud a year. And it only looks to be getting worse; with the advent of new, exploitable technologies, an increasingly globalised world, the tail end of a pandemic, an ongoing war, and a cost-of-living crisis, there now exist the perfect conditions for fraudsters to run rife.
The Fraud Strategy
After months of deliberation and speculation over how this ever-increasing problem ought best to be tackled, this week the Government suggested its answer in a document titled the "Fraud Strategy". At the fore of this Strategy is the aim to cut fraud by 10% by the end of the current parliament. It includes:
- Banning cold calls on all financial products. The Government argues that once the ban is implemented and widely known, the heightened awareness of these scams will work to prevent other people falling foul of similar schemes.
- Extending the power of banks. This would effectively allow banks to delay the processing of payments if they are on notice of any suspicious activity.
- Clamping down on "spoofing". The Government envisages working with Ofcom to use innovative technology to stop fraudsters from being able to impersonate legitimate UK phone numbers.
- Outlawing sim farms. These currently allow devices to be loaded with hundreds of sim cards which are controlled from a single computer, meaning fraudsters can send thousands of scam texts at once. By outlawing them, the Government hopes to deter fraudsters from being able to use the technology in this way, slowing down their access to thousands of potential victims at once.
- Introducing a new system to report cases of fraud. This will provide a simpler route for reporting fraud online, with reduced waiting times and an online portal to allow victims to get prompt updates on the progress of their case.
- Creating a new national fraud squad. The Government aims to tackle fraud by taking a proactive, intelligence-led approach, backed by 400 new specialist investigators.
Does this go far enough?
On the face of it, the strategy appears to have some merit and capitalises on the political momentum we have seen recently in this area. These initiatives are well thought out and respond (both preventatively and reactively) to several well-known fraudulent schemes. But in a climate in which the National Audit Organisation estimates that fraud accounts for 41% of all crimes committed in England and Wales, is a national fraud squad backed by 400 new specialist investigators enough? Can these measures meet the severity of the symptoms and address the scale and speed with which fraud is working its way through society?
Home Secretary Suella Braverman, in advocating for this new approach to the threat, stated: "The fraud strategy outlines how we will use all levers available to us – through government, law enforcement, industry and international partners – to track down these criminals, intercept their scams and bring them to justice."
A stronger solution
But those she listed are by no means 'all the levers'. It is true that the legislative tools to recover such proceeds are stronger than ever. But when it comes to putting stolen money back into the consumer's hands, legislation is only as good as the enforcement mechanisms in place to realise those ambitions. This is where the creation of public/private partnerships – which would combine the dual strengths of the Government's legislative provisions and the civil practitioner's expertise and resources – could prove to be extremely effective at tackling fraud in its various guises, root and branch.
Economic crime and money laundering almost always rely on a network of enablers and intermediaries who motivate, facilitate and, in many cases, orchestrate financial crime. These might include professional service providers and corporate vehicles which are used to conceal the laundered proceeds of crime. Specialists in civil fraud law can use the coercive powers of the High Court to obtain, at speed, targeted search orders, freezing orders, disclosure orders (or as the International Fraud Group neatly explain it, can "Freeze, Seize, and Recover").
This is especially important given that 70% of fraud in the UK is said to either start overseas or to have an international link. Consequently, there is a real need for a strategy that is able to cross borders at speed and flourish in a multi-jurisdictional setting, in precisely the way that fraudsters currently do to their great advantage.
Perhaps unsurprisingly, the Government's new strategy has not been without its critics, with questions being asked both about its (limited) scope and its use of statistics that are said to underplay the true scale of the problem. Labour's Emily Thornberry, the Shadow Attorney General, has said: “This has been billed as a fully integrated blueprint to tackle the entirety of Britain’s fraud crisis, yet it ignores the tens of billions being lost to fraud against businesses and the government, and relies on estimates of the cost of fraud to members of the public that are seven years out of date.”
In that context, it is the potential collaboration between public and private bodies that could serve to bridge the gap between crime detection and making recoveries for victims. Commissioner of the City of London Police, Angela McLaren, has said: “Tackling fraud requires a collective effort and we will continue to work with our partners across law enforcement and industry, doing everything in our power to pursue fraudsters and reduce the devastating harm they cause.”
If Rishi Sunak is to keep his promise of putting fraudsters out of business, it will be essential to harness all the resources available to tackle the perpetrators and the enablers head on. The scale of the problem is vast, and the current counterstrategies are often out-dated; the Fraud Strategy marks an important step forward, but bolder and more ambitious strides will be needed to truly tackle a problem that affects so many people.