Government must go further to crack down on ruthless fraudsters
3 min read
Fraud is the most common crime in the country, representing 41 per cent of all crime in England and Wales. One in 15 of us became victims last year.
I suspect everyone reading this has received some kind of phishing text or email in recent weeks. The cost to victims is huge, and the cost to society is almost £7bn.
In November, the Lords Fraud Act 2006 and Digital Fraud Committee delivered 65 recommendations to the government to make sure it takes the fight against fraud seriously. Last week, the government finally published their long-awaited Fraud Strategy.
Internet service providers have been allowed to operate without accountability for too long
We were encouraged to see several of our priority recommendations adopted across the whole fraud chain. The government will at last introduce a vital “failure to prevent” fraud offence (although it still needs to go further on that), it will launch a coordinated anti-fraud communications campaign, and it has consulted on a new approach to payment processing to provide additional time for some potentially fraudulent payments to be investigated.
Equally welcome, the strategy sets out a range of steps forward in other areas: a money mule action plan will disrupt herders recruiting children to launder their money; a review will assess how fraud is prosecuted from the disclosure regime to penalties and use of civil powers; and sim farms and financial cold calling will be banned. These steps are vital, but gaps remain.
Ofcom recently found that an overwhelming majority of internet users (87 per cent) encountered something online they believed to be a scam and most victims were more likely to be using a computer or smartphone when they first fell victim to a fraudster. The Online Safety Bill will go some way to eradicating the plethora of fraudulent advertising online, but the government appears reluctant to go further.
The measures proposed in the voluntary tech charter are worthwhile – ensuring financial ads are FCA-approved, encouraging private sector support for law enforcement, and better data sharing – but they are voluntary. The government ignored our call for tech and telecoms firms to shoulder some of the burden for reimbursing victims scammed through their platforms to incentivise them to act.
Internet service providers have been allowed to operate without accountability for too long. In its long overdue response to the review of the Computer Misuse Act 1990, the government set out proposals to take down domain names used to commit crime and it has recognised the need to legislate to prevent the creation of domain names when they are clearly being set up to spoof recognised authorities to commit fraud. Companies that allow this to happen must be included in the tech sector charter. Without action on web spoofing, Ofcom’s action on number spoofing only solves half of the problem.
In the absence of sufficient preventative steps higher up the fraud chain, the onus is left to law enforcement to pick up the pieces. The National Fraud Squad certainly sounds good, but success will depend on its ability to tackle an increasingly international problem and to attract and retain enough digitally skilled professionals. While measures announced in the strategy may support this, it promises no new funding despite our call for tech and telecoms firms to pay towards an expanded Economic Crime Levy to contribute to the costs of policing fraud.
The newly appointed fraud champion has his work cut out for him. He adds his voice to a confusing and complex alphabet soup of responsible departments, bodies, teams and taskforces. His challenge in driving collaboration towards achieving the ambitions of this promising Fraud Strategy will be a case of ensuring that actions speak louder than words.
Nicky Morgan, Conservative peer, former culture secretary, and chair of the Lords Fraud Act 2006 and Digital Fraud Committee
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