Fraud – a highly organised business enterprise

There have been 2 interesting Reports commissioned and published in the past few days. The first is the Annual Fraud Indicator, published earlier this month, by the National Fraud Authority, and the other is a research report of BAE Systems, Detica, and the John Grieve Centre for Policing and Community Safety. According to Stephen Harrison,

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There have been 2 interesting Reports commissioned and published in the past few days.

The first is the Annual Fraud Indicator, published earlier this month, by the National Fraud Authority, and the other is a research report of BAE Systems, Detica, and the John Grieve Centre for Policing and Community Safety.

According to Stephen Harrison, CEO of the National Fraud Authority, this year’s Annual Fraud Indicator has put the loss to the UK economy from fraud at £73 billion.

Harrison stated: ‘This level of loss impacts every part of society, including the most vulnerable. It represents money that individuals, businesses and Government can ill afford to lose ending up in fraudsters’ pockets’.

Although this figure is an estimate of fraud loss against the UK, last year’s estimate was £38billion, and the year before, £30billion.

The difficulty when assessing, and evaluating such statistics, are two-fold: The definition of terms, and the methodology used, to gather such data.

The research report focusses upon ‘Digital Crime’. It readily accepts the desire for effective taxonomy. Such a term does not appear in the Annual Fraud Indicator. ‘Cyber enabled fraud’, and ‘Fraud perpetrated by Organised Crime Groups’, appear as separate definitive terms. The term, ‘Digital Crime’ attempts to embrace both terms.

The research report identifies 3 eras of organised crime:

1.    The Prohibition era of the 1920s from the sale of illicit alcohol, gambling, and racketeering;

2.    Exploitation of the Black Market during and following World War II;

3.    Globalisation of drugs markets and new criminal empires in the 1970s;

The 4th era threatened is: ‘..the convergence of the online and offline world, and the new opportunities presented by access to information, online networks and the new forms of ‘electronic’ value..’.

The Research Report identifies the internet as the key facilitator for organised crime, and the ruthless exploitation of ubiquitous mobile devices, wireless internet, and radio frequency identification (such as Oyster cards, and contactless Bank cards).

The Research Report states that ‘80% of digital crime may now originate in some form of organised activity’.

The Annual Fraud Indicator has sought to identify and quantify 4 common enablers that facilitate many types of fraud, namely, Identity enabled fraud, Insider enabled fraud, Cyber fraud, and other enablers. The latter is of course rather ambiguous, but both publications make clear that cyber enabled fraud is a significant concern.

A previous report of Detica commissioned by the Office of Cyber Security and Information Assurance in the Cabinet Office, placed the overall cost to the UK economy from cyber crime at £27 billion per year.

The Annual Fraud Indicator places the share of Fraud in the UK by Organised Crime Groups to be at £9.9 billion. The methodology for calculating this figure was derived through consultation with industry experts and based on management assumptions and judgment.

The methodology used to calculate figures for the Research Report through research conducted through manual methods, coupled with advanced search tools, including Deltica’s NetReveal (R) Analyzer, which specialised in turning large amounts of structured and unstructured data into intelligence.

Of particular interest is the typical ages of those creating digital crime. The research report considers that 43% of those in organised crime are over 35 years. Who would have thought that it was not our computer-savvy yoof (sic.) of today?

Regardless of the true figures, and who is committing such crime, we appear to be in the 4th era.

Action Fraud is a recently launched website, by the National Fraud Authority in conjunction with the City of London Police, and other establishments, to combat cyber-fraud specifically. All too well we know of incidents where victims of fraud, have not known where to go, or whom to tell. They are disparaged by well-meaning staff at Police Stations who do not understand such crime.

This website has been launched, together with some very hard-hitting YouTube publications named: ‘The Devil’s in Your Details’. They focus upon 2 ages of computer-users: Those in their teens, and parents of those teens. The campaigns are shocking. They are supposed to be so.

All too readily, we rely upon new computer technology to store information about ourselves and others, which can be used against us for identity fraud, and the like.

In these days of the 4th era, we must all learn to be a little more cautious with such technology.

David Rosen is a Solicitor-Advocate, Partner and head of Litigation at Darlingtons Solicitors, a working member of the Fraud Advisory Panel, a Certified Fraud Examiner,with the Association of Certified Fraud Examiners, and a visiting associate Professor of Law at Brunel University.

If you have a fraud problem in your business or a personal fraud problem, contact David. he offers experienced, practical advice as well as honed legal skills and knowledge.

David Rosen • Fraud

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