“Fraudsters tighten grip on victims due to COVID-19” reports KPMG UK

Figures from KPMG UK’s Fraud Barometer state that 298 alleged fraud cases were heard during 2021 (up from 180 in 2020). However, the opposite trend is seen in terms of fraud value. The Fraud Barometer figures, which record alleged fraud cases with a value of £100,000 and above, show the total value of fraud reaching UK Crown Courts in 2021 falling significantly from £724 million in 2020 to £444.7 million last year.

While cases in UK Crown Courts provide an indicator of fraud activity, these cases are small in the context of fraud crime reported to Action Fraud. Between 2020 and 2021, there were 875,622 reports made to Action Fraud with a reported loss value of £2.35 billion, duly pointing out the stark reality that relatively few cases are brought to court.

When analysing the data in more detail, it appears that, last year, there weren’t any high value fraud cases over £50 million. Rather, it was the lower value crimes that increased in terms of both value and prevalence. Fraud cases worth between £100,000 and £5 million rose from 164 in 2020 (with a value of £100.3 million) to a total of 285 last year (with the total value being £178 million).

Perpetrators of fraud continued to take advantage of the general public. In 2021, 93 cases of fraud were committed against members of the public to the total value of just under £116 million, compared with 39 in 2020 totalling £33.3 million.

Fall in value

Commenting on the Fraud Barometer study’s findings, Roy Waligora (partner and head of UK investigations at KPMG) said: “With the introduction of the Department for Business, Energy and Industrial Strategy’s White Paper and a heightened focus on fraud, I would hope that it has helped tackle the prevalence of high-value fraud. With increased controls, it’s only logical that less of these crimes slip through the net.”

Waligora added: “In 2020, there was a £200 million film piracy case which accounted for 28% of the fraud value reported. Hence why there has been such a significant fall in fraud values. With new regulation and heightened awareness of fraud, I very much hope cases as catastrophic as that one will no longer be seen in the future.”

He continued: “Another reason for the fall in value could be that more complex cases are still being delayed as a result of the pandemic or are currently being heard in court. We will closely monitor for this in next year’s data.”

Digital fraud on the rise

When the pandemic hit, everyone’s lives were forced online. The same was true for the criminal population. According to figures issued by the National Fraud Intelligence Bureau, 80% of reported fraud is cyber enabled.

The Fraud Barometer data has revealed that fraud relating to cyber attacks or the trading of stolen data rose significantly from one case worth £9.2 million in 2020 to five cases worth £22.6 million last year.

Further, the data exposed a significant increase in the number of cases heard in UK Crown Courts pertaining to account takeover or payment transfer fraud. The volume of this type of fraud increased by 288%, from eight cases in 2020 to 31 cases in 2021. The value of this type of fraud also grew from £8.3 million in 2020 to £46.8 million in 2021, representing a significant rise of 462%.

Account takeover fraud

According to the Fraud Barometer data, account takeover or payment transfer fraud was the second most common type of fraud, second only to embezzlement, which had 51 cases heard in UK Crown Courts in 2021 (compared with 42 cases last year).

Reflecting on the data, Roy Waligora informed Security Matters: “Criminals immediately exploited the new ways of working and living that were created because of the pandemic, causing a huge spike in online fraud. Sadly, many fraudsters continue to take advantage of the unusual situation we find ourselves in, yet it’s promising to see that some of these criminals have been brought to justice. While organisations and the public have been implementing more robust safety checks and preventative measures to curb this type of crime, I expect to see more cases of this variety included in the Fraud Barometer in the future.”