Tech companies failing to tackle fraud should face penalties
When I last wrote in February about the rise in rampant fraud, the fraud minister had just resigned, fraud made up over 40 per cent of crime against individuals, and the Ukraine crisis was being exploited by malicious fraudsters to con victims. Little has changed.
Today, fraud is still rising, it remains the nation’s most commonly experienced crime, and fraudsters have turned their attention towards exploiting the cost-of-living crisis. The Fraud Strategy has still not been published and the Online Safety Bill has not been reintroduced to Parliament. Far from being a trivial casualty of changes at the top of government, these delays are causing victims significant emotional and financial harm.
While the government has not yet made this a priority, Parliament is taking this seriously. On Saturday, the Lords Fraud Act 2006 and Digital Fraud Committee published its report, following hot on the heels of the Commons Justice Committee’s report on the challenges of prosecuting fraud. We took a broader view by examining what we have called the entire “fraud chain”, from the first approach by a fraudster through phishing or online messaging, through to spoof calls and cashing out via money mules or crypto wallets.
The security minister told us that fraud is a 'matter of national security', yet the government’s approach is rudderless
The security minister told us that fraud is a “scourge” on United Kingdom people, but it is simply not treated as a national priority. If the public were being routinely mugged and having millions of pounds stolen in broad daylight, the government and law enforcement would have no choice but to deal with it and bring the perpetrators to justice. Yet, since most fraud happens online, it is largely invisible and often considered a victimless crime.
But fraud cannot be left out of sight and out of mind. In the last year alone almost £2bn has been reported lost by individual victims. This is likely to be an underestimate because many victims are too ashamed or embarrassed to report the crime.
While prosecuting fraudsters is a crucial element of securing justice for victims, the sheer scale of fraud means that we will not arrest our way out of this crisis. Sectors involved in the fraud chain must stop fraud happening in the first place.
Companies that fail to prevent their services and platforms being exploited by organised criminals should be held accountable. Telecoms companies have shirked responsibility while their services pump out thousands of phishing messages. Tech companies have buried their heads in the sand while fraudsters post scam ads and abuse private messaging platforms to socially engineer victims.
While banks are incentivised to tackle fraud because they foot the bill for reimbursement, other fraud-enabling sectors do not fear financial, legal or reputational damage. A criminal failure to prevent fraud offence would change their behaviour and ensure they design-out fraud. The Online Safety Bill must also be reintroduced and amended to ensure all platforms have a duty to stop fraudulent advertising.
As some fraud will inevitably slip through the net, banks should slow down payments so that they have more time to analyse suspicious transactions, and they should be empowered to share risk data more easily. And, while not a silver bullet, fraud-enabling sectors should join banks in shouldering the costs of reimbursement.
The security minister told us that fraud is a “matter of national security”, yet the government’s approach is rudderless. Establishing a cabinet-level subcommittee to tackle the country’s top crime and adding fraud to the Strategic Policing Requirement would signify its efforts to step up to steer the ship.
Fraud is under-prioritised, under-resourced and its impact on victims is under-appreciated. Only by ensuring all those involved in fraud are held accountable for their role will we ever break the fraud chain.
Baroness Morgan, conservative peer and chair of the Lords Committee on the Fraud Act 2006 and Digital Fraud.
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