The amount of money lost to fraudsters in the UK during 2023 more than doubled to a total of £2.3bn, a report finds.
Victims of high-value fraud – cases involving losses of over £50,000 – shot up by 60% last year, while half were for losses of over £200m, which is almost triple the amount compared to 2022.
Corruption and tax fraud were the two costliest types of fraud. Those types of scams accounted for 26% and 23% respectively of the total figures, according to BDO’s FraudTrack report.
The number of reported cases increased by almost a fifth (18%) in a year, which marks a three-year high in overall cases, but just one in seven incidents are being reported by victims to the police or Action Fraud.
Last year signified the second-largest amount lost to scammers since the accounting firm began recording data 21 years ago.
Two high-profile cases help surge overall losses
However, this was largely due to two high-profile cases. One involved F1 magnate Bernie Ecclestone, which led to him paying HMRC a £650m settlement, and a £585m bribery settlement by gambling chain company Entain.
In terms of location, London and the South East of England were the number-one hot spots for reported fraud in 2023 – with cases rising by 43%. The East Midlands darted up to second place from the 12th spot in 2022, while Yorkshire entered the top five locations for the first time in over five years.
The BDO attributed the increasing numbers of cons to the increasing use of online technology, which “expanded the scale, reach, and impact of cyber-enabled frauds”, resulting in huge increases in reported online scams during 2022 and 2023. BDO also noted the ever-growing popularity of authorised push payments (APPs) as a key factor in the escalating numbers.
Those techniques, coupled with the rationalising of the crime due to more financial pressures amid the cost-of-living crisis, have helped create a spike over the last three years.
The report follows the launch of a Government campaign, ‘Stop! Think Fraud’, which aims to raise awareness of the various types of fraud. As part of the initiative, an online fraud hub was created to provide expert advice, information, and support for victims of the crime.
Looking ahead to 2024, despite the new initiative, online scams will continue to rise, according to the global head of offensive security, Vijay Velu, who said that “cyber threats know no boundaries.”
‘Intensifying dependency’ on digital platforms will fuel this year’s fraud activity
Velu said: “We predict an escalation in cyber fraud complexity, with fraudsters exploiting the rise of AI and deepfake tools. There is an intensifying dependency on digital interfaces, particularly with mobile networks, cloud, and financial services.
“All types of businesses are expected to be a magnet – including charities – for sophisticated social engineering and evolved ransomware threats. As digital fraud becomes increasingly sophisticated, there is a pressing need for equally sophisticated cybersecurity strategies to effectively counter these emerging threats.”
Kaley Crossthwaite, the forensic accounting partner of BDO, said: “Two high-level trends emerge from an analysis of the data over the last decade: the number of reported cases of fraud is rising, and the amounts involved are getting bigger.”
Crossthwaite added: “And we believe it is likely to continue doing so, encompassing fraud growth areas such as ESG and tax and with fraudsters seizing on new opportunities, AI and the latest fraud enabling technology. The message for corporate leaders is, as always, be vigilant, be proactive – and seek help if in doubt.”
