UK urged to lead cross-border war on £420bn “fraudemic” sweeping the globe

The Social Market Foundation (SMF) – a cross-party think tank – in partnership with Santander UK, have today published the first-of-its-kind ‘Fraud Threat Prevalence Report’. Through data from a survey spanning 15 countries and 28,000 respondents, the SMF has revealed the global nature of the ‘fraudemic’, and the action that the UK must take to address it.

Across 15 countries, over a fifth (21%) of respondents reported having experienced fraud, with £168bn falling into the hands of fraudsters. When including wider social costs – like the loss in productivity from having to deal with the aftermath of fraud – the 15 economies suffered a total of over £420bn worth of damages. Beyond the financial loss, 40% of respondents reported feeling less trusting of others after being targeted, and one in ten (12%) reduced their use of internet and communication technology as a result.

In the UK, the SMF estimated that 10 million Britons fell victim to fraud between 2021 and 2023, costing the wider economy around £16bn. The average loss for Britons was £907, with a third (33%) reporting suffering a negative emotional impact and 18% an impact to their finances.

Across the countries polled, there was public recognition that alongside banks and other payment services providers (94%), other parts of the ‘fraud chain’, including digital platforms (88%) and telecoms and internet providers (84%) have a responsibility for compensating fraud victims for their losses.

International co-ordination on counter-fraud efforts is desperately needed given fraudsters’ ability to act across international boundaries to claim British victims. Experts that SMF spoke to highlighted the problem this causes for UK law enforcement, who are constrained by geography and the costs of trying to navigate the various international arrangements for law enforcement.

While Labour’s manifesto pledged a focus on fraud, plans for international collaboration have yet to emerge, which is at odds to other types of economic crime.

The report emphasises the global nature of fraud and lifts the lid on the lack of a concerted effort to tackle the low barriers to entry for fraudsters, and the low-risk and high reward nature of fraud. As such, the SMF is calling for the government to:

1. Push for a comprehensive international agreement, including committing to prioritising and investing more resources into tackling fraud.
2. Prioritise the fight against fraud and establish a cross-departmental Economic Crime Leadership Group.
3. Boost the law enforcement response to economic crime.
4. Ensure that there is an alignment in interests amongst those private sector organisations that make up the ‘fraud chain’, including introducing legal duties on these organisations to ensure that they prioritise fraud prevention and bear relevant costs.
5. Ensure that the new ‘Stop! Think Fraud’ public awareness campaign has long-term funding to enable it to continue for the next five years.
6. Increase its support for bolstering the anti-fraud law enforcement and regulatory capacity and capabilities in low and middle-income countries.

Richard Hyde, senior researcher at Social Market Foundation, said: “Our research presents the clearest picture yet of the scale of the global fraud problem. It is not just the UK that is besieged by fraudsters – both developed and developing countries face huge fraud challenges.

“Any nation acting alone remains ill-equipped to deal with today’s fraudsters, who can operate from anywhere and claim a victim thousands of miles away. To tackle the challenge, governments across the world need to co-ordinate and put in place strong counter-fraud measures at home; this will create the best platform from which the world can deal with cross-border fraud. We believe that the UK can and should facilitate and lead that global movement”.

Stephen White, chief operating officer at Santander UK, added: “The report puts to paper the sheer scale of the fraudemic that we’re seeing. Despite the best efforts of banks and policymakers, the criminal gangs who sit behind fraud are enriching themselves to the tune of billions and costing the global economy hundreds of billions. Fraud has become a global phenomenon, as such it needs global, collective action. The UK is in a prime position to lead this charge, but we need renewed focus on tackling the fraudemic across government, banks, and the global technology and communication companies that connect criminals with potential victims.”