New statistics published by the Office For National Statistics revealed fraud offences increased by 25 per cent (to 4.5 million offences) compared with the year ending March 2020, driven by large increases in “advance fee fraud” and “consumer and retail fraud.”
Looking back at the trends in fraud over the past two years, Interactive Investor speaks on fraudsters taking advantage of people struggling with the cost of living crisis: as prices soar, scams are continuing to be rolled out at an alarming pace.
Trends in fraud
The Crime Survey for England and Wales (CSEW) shows evidence of a fluctuating trend in fraud incidents over the short time period where data are available (since the year ending March 2017).
Estimates showed there were 4.5 million fraud offences in the Telephone-operated Crime Survey for England and Wales (TCSEW) year ending March 2022, a 25 per cent increase compared with the CSEW year ending March 2020.
These trends need to be interpreted in the context of differences in coverage and fraud types captured by each reporting body as well as administrative changes. In the year ending March 2022:
- Action Fraud (the public-facing national fraud and cybercrime reporting centre) reported an 11 per cent decrease in fraud (to 354,758 offences) compared with the year ending March 2021, when offences were at record levels (398,022 offences); this fall was driven by a 19 per cent decrease in consumer and retail fraud (to 125,560 offences) and may be related to changes in behaviour as restrictions to social contact were lifted.
- UK Finance reported a 151 per cent increase in fraud (to 246,285 offences) compared with the year ending March 2021, which was a result of an increase in reporting from their existing members because of engagement from UK Finance, as well as reports coming in from new members who joined towards the end of 2021.
Trends in computer misuse
The Telephone-operated Crime Survey for England and Wales (TCSEW) showed there were 1.6 million incidents of computer misuse in the TCSEW year ending March 2022, an 89 per cent increase compared with the Crime Survey for England and Wales (CSEW) year ending March 2020.
While survey estimates showed continued falls in computer virus offences since the year ending March 2017, the trend in unauthorised access to personal information (hacking) offences remained fairly flat between the year ending March 2017 and year ending March 2020.
However, hacking offences more than doubled in the year ending March 2022 (to 1.3 million offences) compared with the pre-coronavirus year ending March 2020. This included victims’ details being compromised via large-scale data breaches, and victims’ email or social media accounts being compromised.
This increase may, in part, reflect the rise in the number of large-scale data breaches around the world. Findings from the Cyber Security Breaches Survey 2022 showed that 39 per cent of UK businesses identified cyber breaches or attacks in the last 12 months.
Characteristics of victims
Unlike many other types of crime, fraud and computer misuse, by their nature, are often committed anonymously, with the offender often not having a specific target in mind. As such, there tends to be considerably less variation in victimisation rates across different demographic groups than with other crime types.
The year ending March 2022 Telephone-operated Crime Survey for England and Wales (TCSEW) showed that:
- adults aged 75 years and over were less likely to be a victim of fraud (5.8 per cent) than all other age groups, except for adults aged 18 to 24 years and adults aged 35 to 44 years; they were also less likely to be victims of computer misuse (1.5 per cent) than those aged 35 to 74 years.
- adults with a disability were more likely to be a victim of fraud (9.1 per cent) than those without a disability (7.4 per cent).
- social renters were more likely to be a victim of fraud (10.1 per cent) than owner-occupiers (7.5 per cent) but were less likely to be victims of computer misuse (2.3 per cent) than private renters (4.3 per cent).
Fraud: loss and amount incurred
Fraud victims incurred a financial loss in around two in three (64 per cent) incidents in the year ending March 2022 Telephone-operated Crime Survey for England and Wales (TCSEW).
Financial loss represents incidents where an amount of money or cash had been stolen or taken as a direct result of fraud, regardless of any later reimbursement, or any additional charges or costs incurred (such as bank charges, repair costs or replacement costs).
In incidents for which victims suffered a financial loss:
- the majority (77 per cent) incurred a loss of less than £250, with the median loss being £79.
- around 14 per cent incurred a loss of between £250 and £999.
- the remaining nine per cent incurred a loss of £1,000 or more.
Fraud: cyber-related
An estimated 61 per cent of fraud incidents in the year ending March 2022 TCSEW were cyber-related compared with 53 per cent in the year ending March 2020 Crime Survey for England and Wales (CSEW).
This suggests that much of the increase in fraud offences was because of increases in cyber-related fraud and may be related to behavioural changes during the coronavirus (covid-19) pandemic and increased online activity. “Cyber-related” represents cases where the internet or any type of online activity was related to any aspect of the offence.
Computer misuse: experiences with computer viruses
For victims of computer viruses in the year ending March 2022 TCSEW:
- the victim thought the virus was a direct result of opening an email, attachment or weblink that they received in 16 per cent of incidents.
- the two most common effects on virus-infected devices were that the device performed badly or stopped working (80 per cent of incidents) and pop-ups were constantly appearing on screen (47 per cent of incidents).
- around one in five (19 per cent) incidents resulted in access to files or data being lost.
Industry response
The proportion of fraud incidents that were cyber-related increased to 61 per cent from 53 per cent in the year ending March 2020; this suggests that much of the increase in fraud offences was because of a rise in cyber-related fraud and may be related to behavioural changes during the coronavirus (covid-19) pandemic and increased online activity.
Commenting, Myron Jobson, senior personal finance analyst, Interactive Investor, said: “Fraudsters have continued to wreak havoc since financial scams mushroomed at the height of the pandemic. Fraud offences are up 25 per cent to 4.5 million offences in the year ending March 2022, compared with the year ending March 2020.
“Scammers worryingly found greater success in persuading victims to make advance or upfront payments for goods or services or for financial gains that do not materialise. They also found greater success in swindling online shoppers.
“Scammers have taken advantage of consumers’ fears and shrouding their nefarious schemes among correspondence by the government and legitimate organisations relating to coronavirus measures. The worry is history could be repeating itself amid the biggest fall in living standards in generations.
“Fraudsters are trying to take advantage of people struggling as prices soar. There have been countless reports of criminals sending texts, claiming to be from the Government or Ofgem given the cost-of-living payments are due to be applied to energy bill accounts.
“The true scale of people falling victim to fraud is difficult to determine. Although total fraud offences referred to the National Fraud Intelligence Bureau increased, those referred by Action Fraud – the public-facing national fraud and cybercrime reporting centre – decreased. This could suggest that some victims are embarrassed about reporting a scam.
“We often overestimate our ability to spot a financial scam when, in reality, even those who consider themselves financially savvy aren’t immune to increasingly sophisticated scams. Falling victim to fraud can lead to financial and emotional harm, with often people who can often least afford it losing money.
“We all need to remain on our guard against scams. In addition to the basics, which include not sharing your login credentials and ensuring that online transactions are made from secure and trusted websites, be mindful of who you disclose personal information to and remember that if a proposition seems too good to be true then it probably is.”
