The growth of Fraud
Each year BDO issues the ‘Fraudtrack
report’ outlining the extent of fraud in
the UK. Their 2015 revealed that the
average cost per fraud was £3.27m, a
79% increase on the same period a
year ago.
Their message is loud and its clear,
fraud is still big business in the UK,
with many companies and individuals
still not doing enough to protect
themselves from fraudsters.
Individuals remain the main target for
fraudsters and scams continue to con
the general public, accounting for
more than 25% of all reported fraud
and totalling £188m of losses.
London is the UK’s fraud hotspot with
the value of reported cases at £460m.
Employee fraud accounts for 32% of
all reported cases, costing UK
organisations more than £46m.
The most common types of fraud
include the straight diversion of cash
into bank accounts, changing supplier
details to friends or family member’s
bank details and direct payments to
self/other bank accounts via cheques
or online payment systems.
Investment fraud such as Ponzi
schemes (A Ponzi scheme is a
fraudulent investment operation where
the operator, an individual or
organization, pays returns to its
investors from new capital paid to the
operators by new investors, rather
than from profit earned by the
operator) and boiler room scams
(boiler rooms' where fraudsters coldcall investors offering them worthless,
overpriced or even non-existent
shares. While they promise high
returns, those who invest usually end
up losing their money) accounts for
23% of reported cases. Third party
fraud – fraud committed by suppliers
and customers – accounts for 20%
and non-corporate fraud accounts for
16%.
“The level of investment fraud is the
stand-out category. This may be the
result of ‘too-good-to-be-true’
investment opportunities, such as
those which offer investment in
precious metals, gems and other
esoteric products, turning out to be
just that. There is a risk that with the
recent pension freedoms, these
illegitimate investment offers will
continue and perhaps even increase,
luring a new generation of investors
with market leading returns.
If you have read my articles over the
last 12 months you won’t be surprised
to hear that the majority of third party
fraud, takes place in the form of
phishing and changing of supplier
details. However, there are also
worrying new trends that are emerging
that organisations need to be on the
lookout for. These include false
employees and contractor creation,
generating an artificial inflation of
costs and customers purchasing nonexistent products such as flights,
magazines and car insurance. “
Norfolk Deli scam.
Interestingly enough there was an
attempt to defraud The Norfolk Deli at
the start of the month. A classic
Vishing attack where there was an
attempt to defraud us for a sum of
£3,000.
It started with a telephone call which
my wife answered.
“Do you sell Champagne?”
“Yes we do, but we specialise in
English wines and have a number of
English sparkling white wines”
“Brilliant, I have a budget of £3,000
and I need to get wine for this evening,
which I can send a courier to collect”
Of course for many shops (including
ours) this sounds too good to be true.
Somebody who’s prepared to buy our
entire stock of wine and fill our bank
account with £3000 at a time when
business dramatically slows down. I
have said it more than once, but as a
reminder “if it looks too good to be true
it’s because it probably is” and so it
would have been in this case too.
My wife told the caller that she needed
to check how much wine we had in
stock and said to me “this sounds
really fishy”. In the belief that they
were about to buy a load of wine it
didn’t take too long for the caller to call
us again
“can I speak to the lady I spoke to
earlier?”
“you can speak to me, I am her
husband. I understand that you want
to buy £3,000’s worth of wine and
you’re located in London?”
“yes we are, but my parents live close
to you”
“And you don’t care what wine we
provide you with?
The phone went dead.
I tried calling back to, but now the
phone would just go directly to
voicemail. I can never categorically
state that this was a 100% bone fide
attempt at scamming the Deli, but I
haven’t lost any sleep over this
although it is likely I would have were
my wine cellar sitting empty as I type.
It is likely that this attempted scam
was the culmination of a number of
scams. The first being the harvesting
of credit/debit card details. Either a
card was stolen from a wallet or as
likely the details were obtained
through one of the many online scams
we regularly hear about on the news.
Once you have card details you want
to turn there details into cash and the
easiest way to do so is to phone an
unsuspecting shop and make a high
value purchase.
Having provided a retailer with a card
number, expiry date and the three digit
security code the theory is that the
transaction is genuine. However this is
described as a ‘card holder not
present’ purchase and such a
payment places the retailer under risk.
When a cardholder receives their
statement and queries the fraudulent
purchase it is they who will be
refunded and it is the retailer who will
be the loser. The retailer will have lost
their stock and the retailer will lose the
money they were paid for the stock.
We tried to report this to Action Fraud
UK, but unfortunately because a fraud
didn’t actually take place, they weren’t
interested. If that doesn’t make sense
to you, it most certainly didn’t make
sense to us either.
As I finish off writing this month’s
article I hear on the radio that it’s
reported that there were more than
five million incidents of fraud in
England and Wales in the last year,
and there were also 2.5 million
cybercrime offences, such as
computer hacking.
I feel like the harbinger of bad news as
this isn’t something which will go
away, it is only likely to increase. What
I do hope is that my article does make
people slightly more diligent and wary
of things.
On a slightly more personal note we
would like to thank everybody who has
popped into the shop to thank me for
writing the articles and even more so
to everybody who’s congratulated my
wife and I for our recent success at the
Norfolk Food & Drink Awards.
This month’s quiz
What is the average age of those who
are scammed is it:
a) 58
b) 36
c) 74