Fraud costs double previous estimates to £30bn

Fraud in the UK is more than twice previous estimates, the National Fraud Agency (NFA) says.

Fraud in the UK is more than twice previous estimates, the National Fraud Agency (NFA) says.

The true cost of fraud is closer to £30bn, more than double the previous best guess of £13.9bn in 2007 by the Association of Chief Police Constables, the NFA said in a statement. Even so, this is likely to underestimate the total due to "patchy" data on private sector and individual losses, it said.

The new higher figure is the result of the NFA collating previously unpublished fraud loss figures, and making its own estimates for sectors where fraud data was unavailable, it said.

The public sector accounted for 58% of the total figure, the private sector 31%, and fraud against individuals 12%, it said.

Most money was lost to tax fraud, estimated at £15.2bn - or about 3% of total tax liabilities. Losses at the Department of Work & Pensions were £1.1bn - or 0.8% of total benefit expenditure.

In the private sector, the financial services industry lost some £3.8bn to fraudsters. Another £1bn went in mortgage fraud and over £2bn in insurance fraud. Fraud in plastic cards, online banking and cheques made up most of the rest. Credit and debit card fraud totalled 0.1% of plastic transactions, the NFA said.

The consumer goods and manufacturing industry lost £1.3bn and £1bn respectively, while the technology, media and telecommunications industry had losses of £948m, it said.

Consumers lost some £3.5bn, mainly in mass-marketing or phishing frauds such as fake share sales and lottery and loan scams, it said.

ACPO lead for Economic Crime, Commissioner Mike Bowron of the City of London Police, said: "We always believed that the true cost of fraud could be much higher than previous estimates."

A spokeswoman for trade association UK Payments confirmed the NFA's estimates of card-based fraud, saying the total lost was less than £1bn. She expected the latest figures, due in March, to reveal a further decline in total losses, but a shift in tactics by fraudsters.

She said chip and pin technology had shrunk card fraud dramatically for UK cardholders both in the UK and overseas. But there was a rise in transactions involving non-chip and pin cards, especially those issued in the US.

She added that consumers' losses were repaid by the banks, but consumers remained vulnerable and liable to money market frauds and online scams such as appeals for donations for disaster relief.

"Fraudsters often donate money to genuine appeals as a way of testing that a stolen card is still valid," she said.

Read more on IT risk management