Britain urged to wage cross-border war against £420 billion ‘fraud’ sweeping the world

With just a week before the new mandatory fraud compensation rules come into force, the Social Market Foundation (SMF) – a cross-party think tank – in partnership with Santander UK, has today published the first of its kind ‘It’s a Fraudster’s World report’. Using data from a survey of 15 countries and 28,000 respondents, the SMF has revealed the global nature of this ‘fraud’ and the action Britain must take to tackle it1.

Across 15 countries, more than a fifth (21%) of respondents said they had experienced fraud, with £168 billion falling into the hands of fraudsters. Taking into account the wider social costs – such as lost productivity due to the impact of fraud – the fifteen economies suffered a total of more than £420 billion in damage. In addition to the financial loss, 40% of respondents reported feeling less trust in others after being targeted, and as a result one in ten (12%) reduced their use of the internet and communications technology.

In Britain, the SMF estimates that ten million Britons will have fallen victim to fraud between 2021 and 2023, costing the wider economy around £16 billion. The average loss for Brits was £907, with a third (33%) reporting a negative emotional impact and 18% an impact on their finances.

In the countries surveyed, there was public recognition that – in addition to banks and other payment service providers (94%) – other parts of the ‘fraud chain’, including digital platforms (88%) and telecoms and internet providers (84%), also bear a responsibility for compensating fraud victims for their losses.

International anti-fraud coordination is desperately needed given the ability of fraudsters to act across international borders to claim British victims. Experts SMF spoke to highlighted the problem this poses for UK law enforcement, which is limited by geography and the costs of navigating the different international law enforcement regimes. Although Labour’s manifesto promised a focus on fraud, plans for international cooperation have yet to emerge, which is at odds with other forms of economic crime.

The report highlights the global nature of fraud and reflects Santander’s fraud expertise across the group. It highlights the lack of a concerted international effort to address the low barriers to entry for fraudsters, as well as the low risk and high reward associated with fraud.

Therefore, the SMF calls on the UK government to:

Push for a comprehensive international agreement, including a commitment to prioritize and invest more resources in tackling fraud.
Prioritize the fight against fraud and establish an interdepartmental Economic Crime Leadership Group.
Increase law enforcement response to economic crime.
Ensure that the interests of the private sector organizations that are part of the ‘fraud chain’ are aligned, including introducing legal obligations for these organizations to ensure that they prioritize fraud prevention and bear the relevant costs.
Make sure the new ‘Stop! Think Fraud’s awareness campaign has long-term funding so it can continue over the next five years.
Increase its support for strengthening the law enforcement and regulatory capacity and capabilities of low- and middle-income countries.

Stephen White, Chief Operating Officer at Santander UK, said: “The report puts on paper the enormous scale of the fraud we see. Despite the efforts of banks and policymakers, the criminal gangs behind fraud enrich themselves to the tune of billions and cost the global economy hundreds of billions. Fraud has become a global phenomenon and therefore requires global, collective action. Britain is well placed to lead this charge, but we need renewed focus on tackling the fraud in government, banks and the global technology and communications companies that link criminals to potential victims.”

Richard Hyde, senior researcher at Social Market Foundation, added: “Our research provides the clearest picture yet of the scale of the global fraud problem. It’s not just Britain that is under siege by fraudsters; both developed and developing countries face enormous fraud challenges.

“Any nation acting alone remains ill-equipped to tackle today’s fraudsters, who can operate from anywhere and claim a victim thousands of miles away. To address this challenge, governments around the world must coordinate and implement strong anti-fraud measures at home; This creates the best platform from which the world can tackle cross-border fraud. We believe Britain can and must facilitate and lead that global movement.”