• Frauds graded according to percentage of people experiencing an attack, average value of loss, number of cases (attempts), and ‘chatter’
• Identity fraud is the worst type of fraud at play in Britain today
• Government pension reforms predicted to trigger the next spate of fraudulent activity 
   

A university academic has worked with Privilege Home Insurance to reveal, for the first time, the worst types of fraud currently being targeted at individuals in the UK.

This is the first time instances of fraud have been quantified according to their net effect and real-life impact on victims, as opposed to simply their frequency or commonness.

Professor Mark Button of the Centre for Counter Fraud Studies, University of Portsmouth, spent two months analysing all categories of fraud currently affecting British individuals (not organisations or commercial entities).

The frauds were analysed according to four criteria, which were carefully chosen to reflect the scale and severity of the fraud in question, as well as its rate of occurrence. They were then given a final ‘fraud score’.  

The criteria used were: percentage of people experiencing an attack, the average value of someone’s loss, the number of cases (fraudulent attempts), and the number of times the fraud has been discussed online (‘chatter’).

Chatter was analysed because the extent to which a fraud or scam is being discussed online is an indication of how much of an issue it is.
 

15 Most Harmful Frauds in the UK Today[i]

Source: Privilege Home Insurance

See below for ‘Types of Fraud Explained’ table
 

Identity fraud is the worst fraud at play in Britain today, coming top of the table with a score of 49. In one of the worst known cases, a British man was left with a £130,000 bill after the German authorities pursued him for debts resulting from someone using his identity with a stolen passport to establish a company.

Investment fraud – where people are tricked into investing in worthless or false shares – comes in second place (43.5), followed by lottery / prize fraud (42.5), where people are encouraged to pay a sum of money to claim a prize that doesn’t exist.

Investment Fraud

An 80 year old man lost £70,000 in life savings after been tricked into buying worthless stocks from a ‘Geneva based stockbrokers’.

Lottery Fraud

An 81 year old woman lost £100,000 life savings to a lottery scam where she was told she had to pay a £50 administrative fee to release her millions of prize money. She repeatedly responded to the letters and was told to keep the winnings secret from the family.

At this time of year – a time when thoughts are turning to summer holidays – holiday fraud (in twelfth place) is also likely to be high risk.

Similarly, the start of the new year may see an increase in slimming fraud (fourteenth on the list), with many people embarking on new health regimes. Some may also look to secure a new career, making career opportunity scams, in seventh place, higher risk too.

Button warns that pension fraud – currently in joint ninth position with pyramid fraud, with a shared score of 23 – will likely become more common in the future due to the government changes in pensions.

Dan Simson, head of Privilege Home Insurance, comments: “The growing problem of fraud has been largely fuelled by the technological revolution of the last two decades. The growth of the internet and our increased access to it have changed the ways we interact socially, such as in shopping and dating, for good.

“For the first time, this report highlights the sheer magnitude of ways we could all easily be subject to fraud, and what the most serious frauds are in terms of real-life impact. Whilst it is not possible to insure our homes and families beyond physical possessions, we hope that raising awareness of the scale of fraud in the UK, will encourage us all to think twice when doing seemingly simple things, such as sharing personal details.”

Commenting on the report, Professor Mark Button, Director and Founder of the Centre for Counter Fraud Studies, University of Portsmouth, said: “Frauds are never static, and seasonal changes, government reforms and awareness campaigns are likely to change the status. The government changes in pensions are likely to make frauds orientated around pensions a growing problem in the future and clearly there is priority to raise awareness here, along with other preventative and law enforcement action.

“The top fraud, identity fraud, however, is unlikely to abate and members of the public should monitor their bank accounts and be careful of how they handle and reveal personal information.”
 

Types of Fraud Explained

Source: Privilege Home Insurance

* A well-respected financier, Madoff convinced thousands of investors to hand over their savings, falsely promising consistent profits in return. Ponzi schemes are run by a central operator (in this case, Madoff), who uses the money from new, incoming investors to pay off the promised returns to older ones, whilst pocketing the difference instead of investing it.

ENDS
 

For more information, please contact: Fran Langdon or Laura Nugent at Van Communications:

[email protected] / [email protected]  / 020 3179 0720

Notes to editors:

The starting point of this paper was Action Fraud’s A-Z of fraud.[i] This lists a wide range of frauds, some of which not relevant to individual victims (more for organisations) and some overlap. From this list 29 categories of fraud were identified. Once these had been listed the researcher sought to map four areas, which were used to analyse the 29 frauds and produce the final ranking:

• Chatter: the extent to which the fraud (or scam) is been discussed on the internet. The more discussion the more of an issue this type of fraud was likely to be. This was secured by a google search with the name of the fraud/scam in “..” to determine the number of hits.
• Percentage experiencing an attack: this used some of the highest quality data from ONS on the number of persons who have experienced an attack (this did not have to be successful).[ii]
• Average value of loss: this uses multiple sources to identify the average loss per fraud.
• Number of cases of different types of fraud: this uses data on the number of cases of different types of fraud, from a variety of sources. As this also used some data from a 2006 OFT study[iii], this part also made use of American Federal Trade Commission data[iv]on the prevalence of certain types of fraud. The justification for this is that because frauds change overtime and that the US as an English speaking country of a comparable stage of development, this would address any distortions the 2006 data might have caused, on the basis they are likely to be experiencing a similar range of frauds.
   

About Mark Button

Mark Button is Director and founder of the Centre for Counter Fraud Studies  at the Institute of Criminal Justice Studies, University of Portsmouth. Mark has conducted extensive research on victims of fraud including the largest study to date of fraud victims in the UK for the National Fraud Authority and ACPO and Sentencing Council. Later this year his book on Cyber Frauds, Scams and their Victims will be published by Routledge (with Cassandra Cross).
 

Privilege

Privilege Insurance specialises in car insurance for safe drivers. It also offers home insurance and breakdown cover by phone or on-line.

Privilege general insurance policies are underwritten by U K Insurance Limited, Registered office: The Wharf, Neville Street, Leeds LS1 4AZ. Registered in England and Wales No 1179980. U K Insurance Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Privilege and UK Insurance Limited are both part of Direct Line Insurance Group plc.

Customers can find out more about Privilege’s products or get a quote by calling 0345 246 0515 or visiting www.privilege.co.uk