Government failing to tackle growing online fraud

The government is failing to tackle online fraud, even though it is now the most commonly experienced crime in England and Wales, according to a report from the National Audit Office (NAO) which claims the Home Office response is ineffective and not proportionate to the threat

In the year to 30 September 2016, the ONS reported an estimated 11.8 million incidents of crime in England and Wales. For the first time, the official figures revealed an estimated 3.6 million fraud incidents, of which 1.9 million (53%) were cyber-related.

In the same period, there were around 623,000 fraud offences, including online fraud, recorded by the National Fraud Intelligence Bureau (NFIB) from citizens and businesses. The NAO says the large difference between estimated and recorded fraud suggests that less than 20% of incidents are reported to the police. There are no official statistics on fraud losses incurred by individual banks or fraud against businesses.

‘Card not present’ fraud increased by 103% between 2011 and 2016, from 709,000 to approximately 1.4 million and the NAO says if the current rate of growth continues, the volume of these frauds could reach 2.9 million by 2021.

Despite the growing threat, the watchdog found police forces around the country take different approaches to tackling online fraud and for some it is not a priority. It says the Home Office faces a challenge in influencing other partners such as banks and law enforcement bodies to take on responsibility for preventing and reducing fraud.

While the NAO welcomes the government setting up the joint fraud taskforce, it claims this has too narrow a focus on banking, while membership is voluntary.

Without accurate data, the Home Office does not know whether its response is sufficient or adequate. Not only is online fraud under-reported, but where data is available, there is a lack of sharing of information between government, industry and law enforcement agencies. There is, for example, no formal requirement for banks to report fraud or share reports with government.

The NAO is also critical of the different campaigns run by the government and other bodies to educate people, which are not due to be formally assessed before March 2018.

The report states: ‘The growing scale of online fraud suggests that many people are still not aware of the risks and that there is much to do to change behaviour. In addition, different organisations running campaigns, with slightly different messages, can confuse the public and reduce the campaigns’ impact.’

The NAO found there is no clear mechanism for identifying, developing and sharing good practice to prevent people becoming victims. It also highlighted concerns amongst stakeholders that the sentences given to online fraudsters were set too low and there was a lack of data on how many fraudsters are prosecuted and judicial outcomes for fraud offences.

The reported noted that ‘the international and hidden nature of online fraud makes it difficult to pursue and prosecute criminals because of the need for international cooperation and an ability to take action across borders.’

Amongst the report’s recommendations are that the Home Office should promote greater transparency and accountability by publishing information on the joint fraud taskforce’s performance and future plans, with other taskforce partners, including banks and law enforcement agencies. The NAO also wants the Home Office to identify and implement suitable accountability arrangements, so that the responsibilities of all partners for preventing and reducing online fraud are clear, and says it should expand the membership of the joint fraud taskforce to include other stakeholders, such as the retail and digital sectors.

Amyas Morse, NAO head, said: ‘For too long, as a low value but high volume crime, online fraud has been overlooked by government, law enforcement and industry. It is now the most commonly experienced crime in England and Wales and demands an urgent response.

‘While the department is not solely responsible for reducing and preventing online fraud, it is the only body that can oversee the system and lead change. The launch of the joint fraud taskforce in February 2016 was a positive step, but there is still much work to be done.  At this stage it is hard to judge that the response to online fraud is proportionate, efficient or effective.’

NAO’s report on the Home Office and online fraud is here.

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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