The government’s fraud strategy must bring all sectors together
Rocio Concha, Director of Policy and Advocacy
| Which?
If the government's fraud strategy is to be successful, it must bring together all sectors to stay one step ahead of scammers.
Scams are everywhere, and the perpetrators are always on the lookout for new opportunities to catch victims out. There are the tried-and-tested methods, like bogus texts about supposed missed deliveries linking to fake websites into which victims are encouraged to enter personal information. And there are also newer methods, many exploiting advancements in artificial intelligence to create unnervingly convincing deepfake videos, ostensibly of trustworthy celebrities, often promoting fictitious financial investments.
Fraud can often feel like it’s all around us - the nuisance calls, scam texts and dodgy emails with dodgier hyperlinks. But sometimes stats come around that hammer home its presence in our everyday lives.
The Office for National Statistics last week announced that, in the last year, fraud has increased by 33 per cent compared to the previous 12 months. The ONS estimates there were more than four million incidents of fraud in that time period - a truly staggering statistic.
It should make us all sit up and take notice - not least government ministers who are working on a fraud strategy to protect consumers and businesses. It is by no means an easy feat - just ask the previous government. Their fraud strategy targeted a 10 per cent decrease in incidents from pre-pandemic levels (to 3.3 million) by the year ending December 2024. The reality, as borne out by the ONS statistics, is that the figures increased by 12 per cent. It’s clear that a more robust approach is now needed.
The consequences of these terrible crimes on its victims are far from trivial. Financial losses are incurred. Last year, banking body UK Finance estimates that nearly £1.2 billion was stolen to payment fraud, equivalent to more than £2,000 every minute. Beyond the monetary losses, victims’ emotional wellbeing can also take a dent. Which? research has previously found that total losses incurred to victims’ wellbeing is in the billions of pounds. Fraud victims speak of losing confidence and damage to their sense of self esteem and ability to trust after the event.
An often overlooked outcome of fraud is that the wider economy is also negatively affected. Many fraudsters operate as part of criminal gangs, often based overseas. Money lost to them is money that could have been spent supporting legitimate businesses based in Britain.
The solution, then, lies in looking at the fraud ecosystem as a whole. Fraud involves multiple actors, all of which have a part to play to protect their customers. Scam attempts are so often multilayered, meaning a customer can spot the scam (an investment opportunity, say) on social media, be taken to a fraudulent website before being asked to send money via bank transfer to an account controlled by the fraudster. The scam doesn’t just involve the offending tech company, but also the sending and receiving payment firms involved in authorising the payment.
Some positive progress has been made. After years of campaigning by Which?, banks and payment providers are now required to reimburse victims of bank transfer fraud when they are not at fault, which provides strong incentives for payment providers to put in place the right measures to protect their customers. This replaces the previous voluntary system which too often led to a reimbursement lottery depending on which firm the victim banked with. The Online Safety Act, a law passed to protect consumers while online, is an encouraging step forward and will require platforms to put in place proactive measures to prevent their users from encountering fraudulent material and to remove such material from their sites quickly, or face tough penalties like fines.
However, the most popular tactic used by scammers to defraud their victims is via online scam advertising - and here there is a glaring hole in online safety laws. While the Online Safety Act will place specific duties upon the largest online platforms to combat paid-for fraudulent advertising, ads on smaller services and on news websites (so-called ‘open display advertising’) will not be covered.
These are the adverts that pop up and can blight our lives, enticing internet users with great-sounding deals. While the previous government had committed to addressing these scam ads on smaller platforms through the Online Advertising Programme, there is a lack of clarity on what this government intends to do about it.
Which? believes that as part of its fraud strategy, the government should announce a plan to tackle scam advertising not currently covered under the Online Safety Act and provide concrete timelines for a route to legislation. This should be introduced as soon as possible, so there are no gaps in protections that scammers can exploit.
With fraud now so widespread and so entrenched in our everyday lives, there is a greater need for all actors involved in fraud to work together. That includes government ministers, law enforcement agencies, the police, banks and payment providers, telecoms firms and social media companies, sharing intelligence on how scammers operate on their platforms and doing all they can to protect their customers. As we know all too well, the consequences of inaction lead to misery.
