Monday, June 24, 2024

UK anti-fraud efforts have failed and need ‘wholesale change,’ lawmakers say

The British government’s response to fraud needs “a wholesale change in philosophy and practice,” according to the House of Commons Justice Committee.

In a report published Tuesday, the committee detailed how law enforcement agencies and other stakeholders have structurally failed to stop digital crimes and lack adequate resources to address the issue.

Despite a commitment to make the U.K. “the safest place in the world to live and work online” the government has presided over a 25% annual increase in reported fraud cases, more than half of which are driven by cybercrime.

There were almost 900,000 incidents reported to police and other monitoring organizations between September 2020 and 2021 — incidents that caused not only “financial losses but emotional and psychological distress” — and testimony to the Justice Committee repeatedly warned that the true figure was likely much higher.

Its report published on Tuesday highlights a number of failings regarding the resources the government has committed to tackling these issues. It particularly criticized Action Fraud, the national reporting center for fraud and cybercrime, which it said “has proven itself unfit for purpose.”

Action Fraud is set to be replaced in 2024 with a new reporting service underpinned by technology that will allow greater analysis of the volume of crimes reported — something the current service doesn’t provide.

The committee noted that only 2% of police funding is dedicated to combating fraud despite it accounting for 40% of reported crime. The report said that out of the 20,000 new police officers the government was elected on a pledge to hire, only 380 will be deployed in response to fraud.

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Following a rapid reversal in current Prime Minister Liz Truss’ economic policy, it is not clear whether the government will continue to fund the hiring of all 20,000 of the new officers. It has warned that “difficult decisions” will have to be made on spending due to the state of the British economy.

According to the Justice Committee report, fraud is estimated to “cost society at least £4.7 billion each year” (about $5.3 billion) and yet it warned that less than 8% of reported crimes are investigated, finding that “the level of focus from policing is inadequate to deal with the scale, complexity and evolving nature of fraud.”

The committee’s chair, Sir Bob Neill MP, said: “People are losing their life savings and suffering lasting emotional and psychological harm. But the level of concern from law enforcement falls short of what is required.”

Compounding the lack of investigation of fraud crimes “there is also a lack of prosecution,” according to the committee. The report noted that the Office for National Statistics estimates there are 4.6 million fraud offenses committed each year, “but in the year ending September 2021 just 7,609 defendants were prosecuted for fraud and forgery as the principal offense”.

The inquiry also received testimony about “significant delays in hearing fraud cases, problems with the application of disclosure rules in cases with large amounts of digital material and the importance of early engagement between all bodies involved in order to conclude cases in a timely manner” — amid a growing backlog in cases at British courts which has similarly been attributed to a cut in government funding.

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The committee warned that “a key barrier” to greater engagement between the police, prosecution and defense “has been the lack of legal aid funding” which the government has recently committed to providing, although again this may be in question ahead of the Halloween financial statement.

The volume of fraud cases originating from foreign jurisdictions, however, means there is a low prospect of conviction in many cases. “There is simply not the capacity within the criminal justice system to tackle the millions of fraud crimes taking place each year,” the report warned.

Mark Steward of the U.K.’s Financial Conduct Authority testified: “For all the will in the world, with the most efficient volume-oriented prosecution programme, you will not be able to capture all of what is happening on the internet.”

In its evidence to the inquiry, the Association of Police and Crime Commissioners warned “we are not going to arrest our way out of this” and said “the best way to tackle fraud is to prevent victimization.”

The committee made 43 recommendations, including a specific minister for fraud and economic crime, as well as increasing funding and police resourcing, and said it particularly welcomed obligations being introduced in the Online Safety Bill on technology companies to prevent frauds being perpetrated on their platforms.

“Overall, a wholesale change in philosophy and practice is needed to the way in which we fight fraud — one that takes it more seriously, gives it greater priority and resourcing, is more proactive in prevention, more aggressive in investigation, prosecution and conviction, and much more focused on its impact upon victims,” the committee wrote.

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Steven Black (n0tst3)
Hello! I'm Steve, an independent security researcher, and analyst from Scotland, UK. I've had an avid interest in Computers, Technology and Security since my early teens. 20 years on, and, it's a whole lot more complicated... I've assisted Governments, Individuals and Organizations throughout the world. Including; US DOJ, NHS UK, GOV UK. I'll often reblog infosec-related articles that I find interesting. On the RiSec website, You'll also find a variety of write-ups, tutorials and much more!

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