The greed and deceit that costs us dear

It’s insidious and pervades everywhere there is money to be had by lying and cheating, but fraud cannot be left unchallenged, writes Dan Matthews


The great thing about fraud, from a criminal’s perspective, is that you don’t have to be there. Robberies are messy, complicated affairs that generally end up with someone being clattered over the head or worse.

There’s a tricky requirement to escape from a robbery, and quick police response times, witnesses with smartphones, ubiquitous CCTV and DNA-based evidence makes getting away with “in-person” theft increasingly difficult. Over time, your chances of staying free reduce towards zero.

Why take the risk? It’s much better to sit at home and let the money come to you. Fraud offers plenty of scope to ply your trade in different ways from Ponzi schemes to computer fiddling and fake IDs. You can commit crimes in countries you’ve never been to and you can hide, sniggering, behind virtual walls.

When is a crime not a crime? When no one knows it happened? Many frauds go unnoticed, let alone unreported – a fact which increases chances of your collar remaining unfelt from nought to 100 per cent. It’s a much better way to make money than wrestling a granny for her handbag.

Perhaps that’s why fraud is so popular; it is literally everywhere you look. The UK Cards Association says the value of card-not-present fraud (conducted via telephone, internet or mail order) topped £245 million in the UK last year, an increase of 11 per cent on 2011.

Similar rises were reported in cases involving skimmed, cloned, lost or stolen cards and cases of mail non-receipt. But the big winner was card-based ID theft, which flew up 42 per cent in a single year.

Identity fraud has claimed four million victims in the UK alone, according to Action Fraud, part of the National Fraud Authority. The cost of insurance fraud reached £2.1 billion last year, says the Insurance Fraud Bureau, enough to lump £50 on to the cost of every insurance policy in the land.

One of the biggest threats targeting businesses around the world is financial fraud through sophisticated banking malware

It goes on. In 2012, UK banking fraud was up 11 per cent, there were 1,212 frauds involving online dating and the UK was even declared the “most phished” country in the world with losses of £27 billion through cybercrime – that’s the equivalent of the UK’s total council tax bill.

In response, anti-fraud agencies have invested heavily in tracking the developing threat, and businesses have developed new systems and processes to limit losses. But the fraudsters invest heavily too, and the fluid evolution of technology gives them a perfect landscape in which to adapt and evolve.

Andy Crocker is an independent fraud and security expert who has a special interest in phishing, a con in which scammers send e-mails purporting to be from a bank or retailer. These provide links to clone sites that require customers to login, in doing so revealing personal bank details.

“Despite all the security technology available to businesses, people are the weakest link in most cyber defence systems,” he says. “If we educate the people as to what to look for, they are no longer the weakest link, but become the best method of defence.”

Don Smith, director of technology at Dell SecureWorks, says fake links in e-mails are also a conduit for malicious code and that, strictly speaking, people should use one computer for sensitive data and one for web-surfing and e-mail, as these are the most common causes of infection by viruses.

But the really big frauds target institutions, not individuals. “One of the biggest threats targeting businesses around the world is financial fraud through sophisticated banking malware, such as Gameover ZeuS, SpyEye and Gozi Banking Trojans,” says Mr Smith.

“Collectively, these banking Trojans have been responsible for the theft of millions of pounds from organisations across the globe. Many hackers on a mission for five, six and seven-figure thefts do advanced and in-depth research on their victims so they can successfully compromise them.”

According to Jonathan Middup, EY UK head of anti-bribery and corruption, the government’s role in addressing the fraud menace has reduced in recent years. Fraud and bribery laws have been deprioritised because of complexity and expense, so individuals should get better at protecting themselves.

“The biggest obstacle we face, be it in business or private life, is being too trusting,” says Mr Middup. “We habitually underestimate the risk that people we are dealing with might be dishonest. We seem to be embarrassed to ask probing questions. If we are approached by someone on the street rattling a collection box, what’s wrong with scrutinising their ID card? Scepticism is a good protection.”

As individuals, we need to get better at identifying “red flags” and knowing when something is too good to be true; as organisations we should take a strategic approach to fraud management, to understand the biggest risks and eradicate them. If we don’t, the fraudsters win every time.