The total value of fraud in the UK more than doubled to £1.7bn in 2019, up from £746.3m the previous year, according to research carried out by accountancy and business advisory firm BDO LLP. The average value of fraud also increased, rising from £1.4m to £3.6mduring this period.
The analysis, based upon reported fraud cases over £50,000 in the UK, reveals that despite the rise in value, the number of reported cases has dropped by 12% - with 464 cases of fraud reported in 2019 compared with 525 in 2018.
Fraudsters are now understood to be taking advantage of the COVID-19 outbreak, with mass home working and operational shifts to e-commerce opening up new opportunities for criminals to target companies.
Kaley Crossthwaite, Partner and Head of Fraud at BDO, commented: “Despite the volume of reported fraud falling last year, the rise in value suggests that sophisticated fraudsters are becoming increasingly predatory.
“Compounding this, COVID-19 has provided a fertile breeding ground for fraudulent activity and we’re anticipating a spike in cases this year. Now more than ever, companies and individuals must remain vigilant and sceptical in order to protect themselves. Firms should focus on controls, must not ignore red flags, and need to be confident enough to challenge in the way they did prior to this pandemic in order to remain safe.”
London and the South East remained the biggest hotspot for fraud in 2019, accounting for just under half of all reported fraud cases. The capital witnessed a 67% increase in cases last year, bringing the total value of fraud in this area to £794m, up from £476m in 2018.
The North West took over from Yorkshire as the hotspot outside of London, with the value of fraud in the region almost 10x bigger in 2019 than the previous year, growing from £52m to £500m. The number of reported cases in the North West remained the same, however the growth in value was largely down to a Lancashire-based scammer accused of two cases of fraud involving an airport parking scheme and a separate investment scam, totalling £430m.
Elsewhere in the North of England, the value of fraud in Yorkshire fell by 69%, with the volume of cases also dropping by just over 20%. The total value of fraud in the region dropped from £52m in 2018 to £16m last year.
Types of fraud
Fraud relating to the unauthorised or misuse of assets recorded the highest total value, rising from £115m in 2018 to £671m in 2019.This increase was largely down to two significant cases, one including a collapsed investment firm owing money to 11,600 savers, and the second involving a businessman who defrauded investors and his company out of £250m.
The second highest value related to third-party fraud, which more than doubled in a year, bringing the total value to just over £522m up from £181m in 2018. A large number of these cases relate to employees or suppliers of businesses.
Not all types of fraud saw a rise in value, with cases relating to tax and to theft and cash fraud dropping by 13% and 9% in value, bringing the total cost of fraudulent activity in these areas to £116m and £29m respectively.
“We know that these figures are the tip of the iceberg and as many as 1 in 5 frauds go unreported, with businesses often keen to avoid the reputational damage that fraudulent activity can bring.
“With third-party and employee fraud increasing in value and many businesses shifting priorities and acclimatising to new ways of working, business leaders and individuals must remain more vigilant than ever. It is vital to have a healthy level of scepticism and robust controls and procedures to manage the risk of both internal and external fraud.”
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Notes to Editors
Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.
Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high-growth businesses that fuel the economy.
We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed.
BDO LLP operates in 17 locations across the UK, employing nearly 5,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.
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