ID Theft the Cause of UK Fraud New High

February 6, 2008

Fraud in the UK hit a 12-year high in 2007, as criminals progressively turned to the Internet to perform ID theft, according to KPMG Forensic.

Last year £1-billion of fraud arrived in court, the peak value since 1995 and the second highest in the 20 years KPMG has been running the report, titled the Fraud Barometer. Concurrently the amount of cases brought to court fell to 197 from 277 in 2006.

Organised criminal teams were to blame for £889m of the proceeds, virtually 90 percent of the fraud by value, the majority of which was via VAT fraud, ID theft and other types of white collar crime.

The firm said technology has become the new theatre of war for fraudsters, with a great deal of the threat from ID theft originating from the Internet.

KPMG Forensic partner Hitesh Patel, in a statement stated “The sophistication of organised fraud in the UK is certainly extremely concerning. More fraud cases have been coming to court in recent years than previously, but one fears that this is just the tip of the iceberg. As companies tighten their belts in the harsher conditions and take a closer look at their operations and related expenditure, it is highly possible that a greater number of frauds may be detected.”

Patel suggested that companies include anti-fraud analysis systems to their normal monitoring and oversight processes.

The zenith target of fraudsters was the government, whose agencies were hit by £833m in fraud, an increase from £221m in 2006.

ID theft was a chief basis of fraud, for example utilised in false benefits and tax credit claims. A husband and wife team were accountable for £1.1m in benefits fraud, claiming benefits for eight adults and 46 children in a one-bed flat in London.

Financial institutions saw the cost of fraud liability drop from £140m in 2006 to £37m in 2007, while businesses were hit by £24m in fraud in contrast to £81m the previous year.

Employees and management instigated an approximate comparable number of frauds - 36 and 34 respectively - but management hitched £54m, nearly twice the £27m that employees did.

While technological intimidation is the most recent instrument for fraudsters, many criminals’ techniques were amazingly low-tech, KPMG said. A Midlands-based gang stole homeowners’ identities under the pretence of potential buyers, accumulating sufficient particulars on the house to apply for title deeds from the Land Registry and then remortgaging the properties, coming away with £500,000.


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