UK fraud topped £2bn in 2011, equating to a whopping 50 per cent increase on the previous year, according to market watcher BDO LLP.
The firm’s FraudTrack report claimed the figure was the highest ever for its annual survey, with the 2010 amount hitting £1.4bn.
In 2003, when the report was launched, fraud totaled £331m, meaning levels have rocketed seven-fold since then.
FraudTrack collates data from all reported fraud cases (tax fraud, supplier and customer fraud, corruption, management fraud and employee fraud) over £50,000, and it also tracks the average value of cases. Unsurprisingly, values of fraud also increased in 2011 – an average of £5m, compared with £3.7m in 2010.
Retail represented the highest increase in fraud for the year – accounting for 12 per cent of all fraud in 2011 compared with two per cent in 2010. Finance and insurance accounted for 27 per cent of fraud, dropping dramatically from the 56 per cent in 2010. Construction-based fraud also dropped to one per cent, down from 34 per cent in 2010.
Simon Bevan, head of fraud at BDO LLP, said: “The fact that reported fraud is up is worrying, but not at all surprising. When the economic climate is difficult there is even more focus on the bottom line and driving out unnecessary costs, so fraud is more likely to be uncovered.
“But organisations need to much more proactive when it comes to preventing fraud. Too often risk teams are either too externally focused or fail to look at fraud from a financial point of view,” he added. “Organisations need to be taking a P&L approach to fraud risk. If companies continue to take a reactive approach to preventing fraud, I’m in no doubt that these figures will continue to rise year on year. You cannot design all fraud risk out of a business but you can put trip wires in place.”
- Tax fraud accounted for the highest percentage of fraud committed, at just over 36% and with an average cost of £13m - significantly higher than the average across all frauds (£5m). As a percentage of overall fraud, tax fraud has steadily increased in recent years, from 15% in 2009, to 20% in 2010, to 36% in 2011.
- After tax fraud, most fraud is committed by suppliers and customers (30%) with the average cost per supplier/customer/fraud at £7.7m. As a percentage of overall fraud this has also increased steadily, from 12% in 2009 and 18% in 2010.
- Employee fraud is down to 10% from 14% in 2010. The average per fraud is only £14.m which is substantially lower than the average across supplier/customer fraud and across all frauds.
- Cases of corruption are steadily increasing from less than one per cent in 2009, to just under two per cent in 2010 to 4% in 2011.
- Management fraud has been steadily decreasing and the 2011 figure is the lowest in four years (2011 - 5.5%, 2010 - 13%, 2009 - 24%, 2008 - 31%).
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Two men who conned a woman out of £1.6m by using a fictional character to contact her on a dating website have been jailed.
The woman thought she was corresponding with a man called Christian Anderson, and she gave him money to fund a supposed business project.
The fake persona was created by Ife Ojo and Olusegun Agbaje, who pleaded guilty to conspiracy to defraud.
Ojo was sentenced to 34 months in prison and Agbaje to 32 months.
The victim of the fraud, a woman in her 40s from west London who cannot be named, struck up a correspondence with the fictitious Mr Anderson through Match.com.
She was persuaded to pay money to his "personal assistant" in order to help him complete a project in Benin so that he could come to live with her in the UK.
She then made assorted further payments, ranging from £25,000 for a police fine to thousands of pounds to free up inheritance money left by his mother.
Prosecutor Lesley Bates said the victim had borrowed money from friends and family, believing it would be paid back when Mr Anderson came to live with her.
Ms Bates told Basildon Crown Court: "She [the victim] has since experienced stress, cries, is depressed and unable to trust people."
Police identified Agbaje, 43, from Hornchurch, and, when they raided his home, found him with Ojo, 31, from Peterborough, Cambridgeshire.
At Ojo's home they found a laptop containing records of the victim's conversation and a "seduction kit" including the poetry book For My Soulmate and a dating manual called The Game.
John Femi-Ola, mitigating for Ojo, said his client was originally from Nigeria and had been introduced to the scam by Agbaje.
Simon Smith, mitigating for Agbaje, said his role was to provide a bank account and "the planning and sophistication of this crime was not his responsibility".
The court heard the victim met somebody pretending to be Mr Anderson in person once, describing him as "a handsome white man".
The Metropolitan Police are still working to identify others involved, including the person who posed as Mr Anderson.
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