Home Office Reveals 20% of UK Businesses are Affected by Fraud

An extensive survey of thousands of businesses between 2018 and 2022 determined that one in five UK businesses were victims of fraud. During the past three years, more than half of all companies were affected by fraudulent activities, with each business incurring a loss of £16,000, covering 20% of all businesses. However, most companies did not report them to authorities.

The UK Home Office published a report last week examining the severity of fraud experienced by one in five UK business owners in seven different sectors. It was reported that fraud impacted 20% of all businesses in the three years leading up to 2020. For one group in the wholesale and retail industry, there were anywhere between 1 and 5,000 fraudulent incidents during this period, with an average cost per business of approximately £16,000.

“Across all [surveyed] business sectors, the incidence rate for any fraud in the 3 years prior to interview was approximately 3,917 incidents per 1,000 businesses, suggesting high levels of repeat victimisation,” the Home Office said.

As a result of extrapolating the data, the Home Office estimates that nearly 4.5 million fraud incidents occurred at companies in seven industries between 2018 and 2023, such as retail, construction, and financial services. Among the companies surveyed, only 32% reported their most recent fraud experience to the police, whilst only 25% reported it to Action Fraud, the national fraud reporting agency. One of the most prevalent crimes in Britain is fraud against individuals, with 3.7 million incidents reported between September 2013 and September 2014.

Considering how many financial crimes go unreported, the Home Office has surveyed businesses to better understand the extent of fraud against companies. The incident occurred in 2020, but the poll was not made public until last Wednesday, the same day the Home Office published its new fraud strategy.

It has been reported that Emily Thornberry, shadow attorney general, has written to Suella Braverman regarding the lack of data included in the strategy, regarding the value of losses caused by fraud and the hundreds of thousands of unrecorded frauds committed by businesses.

In Thornberry’s view, excluding figures of this significance from the fraud strategy was “inexplicable and unjustifiable”. Furthermore, she stated that the results would have been higher if the survey had included all other industries and had not been “sat in a drawer for three years”.

The UK’s annual fraud losses are estimated by an independent “Annual Fraud Indicator” produced by private businesses and academics at £190 billion, of which £140 billion is attributed to the private sector due to procurement fraud and payroll fraud.

Some believe the research was not a sample survey and, therefore, cannot be used to estimate the national cost of fraud to businesses. It was also noted that a follow-up survey would be conducted next year including all sectors.

The trade organisation, UK Finance, conducted a study on Thursday showing that almost all authorised push payment fraud originates commerce online or over the phone. Government concerns about the impact of the fraud strategy on big tech and telecom led to watered-down proposals that would have mandated compensation.

According to David Postings, the chief executive of UK Finance, tech companies “should be putting their hands in their pockets [to contribute towards stopping fraud], particularly as they profit from it”.

In a statement, Antony Walker, deputy chief executive of techUK, which represents the technology sector, stated that companies “already take a wide range of active measures to prevent fraud” and would work with others to deliver on the fraud strategy.

The fact that neither procurement nor payroll fraud was mentioned in last week’s 22,000 word fraud strategy was “astonishing,” according to Thornberry. “It is conceivable that… the decision was taken — consciously or otherwise — to downplay or downright ignore the offenses and losses suffered by businesses, in order to focus more narrowly on the impact of fraud on the general public,” she said.

The Home Office said it was “absolutely committed to cracking down on scams” and continued “to work intensively with partners across government, law enforcement and industry to protect the public and businesses from fraud.” 

Suggested Reads:

ESTONIA’S NEW AML/CFT REGULATORY REGIME SPARKS 80% DOWNFALL IN LICENCED CRYPTO FIRMS

UK’S REVISED FRAUD POLICY CRITICISED FOR INEFFECTIVENESS AGAINST RISING CRIMES