The KPMG Fraud Barometer report analyses the trends of fraud within the UK, focusing on major fraud cases that are heard in the Crown Court where charges are in excess of £100,000.
The value of fraud in the UK drops from £1.1 billion in 20219 to £724 million in 2020. The 36% reduction in value, alongside a 51% drop in volume of the cases heard (369 cases in 2019, 180 in 2020) suggests that fraud offences have been on a steep decline in comparison to 2019. However, this first impression would be completely misleading.
In fact, it is the COVID-19 restrictions that have played a huge part in the difference in fraud figures from 2019 to 2020. Fewer cases have been heard in the Magistrates Court and therefore have yet to make their way to the Crown Court. Then, fewer Crown Court trials have taken place. Cases that would otherwise have been tried in the Crown Court, therefore, do not have a presence within the figures in the KPMG report. In essence, although the figures in the report indicate a drastic reduction in the volume and value of fraud cases, this isn’t an accurate representation of the levels of fraud within the economy, but only the difficulty that the courts have faced in processing them.
What are the biggest trends of fraud to note in 2020?
The KPMG report highlights that while the overall volume and value of fraud has crime reduced, this has not been the trend across all the specific types of fraud.
- Procurement fraud - increased by 200% compared to 2019, from £16 million to £49 million
- Loan and mortgage fraud - increased by 675%, from £9.7 million to over £75million
- Fraud through counterfeit, pirated or below stated quality goods - increased by 415%, from £39 million to over £202 million, despite the number of cases falling from 19 in 2019 to 5 in 2020.
- Tax fraud - reduction of 93% from £721 million to £54 million
- Romance fraud (commonly known of the online dating practice of “catfishing”) - halved in value, but the number of cases remained the same.
- Fraud with gambling or drug addiction listed as the motivation - cases rose from 16 to 21, and value decreased from £7.5 million to £7.3 million.
In relation to regional trends, almost all regions saw a decrease in both the value and volume of fraud cases. East of England and London were the exceptions, both saw an increase in volume.
The value of fraud cases in London has more than doubled in 2020, an increase by 173% from £207 million in 2019 to £564 million in 2020. This is despite the fact the number of cases being heard have fallen by 43%. The increase in value came from eight high value cases which individually were over £10 million in value, including one case valued at a staggering £200 million.
The victims of fraud
The top victims of fraud in 2019 were the government, commercial businesses and the general public, with the government being the most targeted. In 2020, the top victims remain the same, but just at a reduced amount and the most targeted victim being commercial businesses.
The perpetrators of fraud
Professional criminals, management and employees of commercial businesses were recorded as committing the most fraud offences in 2019. Similarly to the trend of victims, the top perpetrators remains the same in 2020, again at a reduced rate, but with the addition of customers. Additionally, it is recorded that males make up the large majority of the perpetrators of fraud within the UK for 2020.
The future for fraud
COVID-19 and Brexit have something in common; they have both brought disruption and uncertainty, which are economic conditions which make fraud tempting to some. With this in mind, 2021 is at high risk for fraud and economic crime to continue and increase.
The KPMG report provides a direct message to companies to keep an eye out for insider fraud and embezzlement-related incidents. This is due to employers being unlikely to fully understand what the new normal looks like for their business operations as well as their internal controls remaining compromised with staff working from home indefinitely.
Furlough fraud is set to make its mark in 2021, however the full extent of the impact of the government schemes will not be evident until 2023, the report suggests. For context, furlough pay was introduced in March 2020, and it was estimated that £3 billion of that pay had been stolen by October 2020.
Similarly, the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS) were both lifelines for over a million businesses during the pandemic. Over £1 billion in fraudulent loan requests have been identified, which is set to increase in the future.
With these kind of figures involved it is inevitable that action will be taken against the alleged offenders. Unfortunately those that have acted mistakenly or wholly innocently are likely to get caught up in these investigations too.
How can we help you if you find yourself involved in fraud investigations or faced with fraud charges?
It can be a very distressing time if you are accused or charged with fraud. Here at Stephensons we have a dedicated fraud team who have many years of experience in successfully representing businesses and individuals facing investigations and prosecutions for fraud. Our expert, in-depth knowledge of the fraud process allows us to deal with your case in the best manner in order to ascertain the best possible outcome for you.
If you do require our assistance please do not hesitate to contact our fraud team on 0333 200 9843 or complete an online enquiry form.
A full copy of the KPMG Fraud Barometer report can be obtained here.