Fraud is now officially the most prominent crime in the UK, costing the economy £137bn each year. Martin Wilson, CEO of OneID, writes for Payment Expert and argues identity technology is the answer to tackle this fraud epidemic.
Fraud now leads the way as the most common crime in England and Wales, costing the UK £137 billion a year.
There was a plan put in place by the government in 2019 to resolve the issue, the UK’s first Economic Crime Plan (ECP). However, this ended in July 2022, with the promise of the government implementing a second ECP in autumn 2022.
The second plan is being drafted amidst much scepticism and time pressure as, according to the RUSI ECP tracker, the first ECP failed to deliver on 52% of its actions. There is an increasing demand for a more robust ECP as financial crime tears through a multitude of sectors, threatens safety and most often, results in horrific consequences for those involved.
At the heart of the majority of fraud is fake or obscured identities. Developments in technology means we can now verify identities before money changes hands. This has the potential to immediately reduce the eye watering levels of fraud in the UK and mitigate the abhorrent crimes that stem from it.
Far from a victimless crime
In the past, economic crime has often been characterised as a victimless crime. People believe that it’s only banks and corporations that suffer and that they can afford to – it’s not our problem. As a result, it’s often not taken as seriously as other crimes.
Most people aren’t actually aware of the crimes that economic fraud funds and how it can have devastating effects for the most vulnerable in society. The proceeds are often used for unthinkable crimes such as slavery and human trafficking – the number of referrals for these crimes have increased by a third since last year.
From an economic perspective, it’s not a pretty picture either. Many corporations suffer huge financial implications as a result of economic crime which funds depraved criminal activity, meaning that a large portion of our country’s wealth is stolen as a result. This has a sizable impact on the UK’s overall GDP.
As well as businesses, fraudsters are also increasingly targeting consumers. Fraud offences have increased by 25% to 4.5 million offences, the effects of which can manifest both physically and psychologically. As many as 79% of fraud victims have experienced a negative emotional impact due to financial scams.
By continuing to ignore the statistics and consequences of fraud, we’re allowing these crimes to erode societies.
An issue that must be tackled
Economic fraud has reached a point of concern that can no longer be ignored – police forces and banks have invested in more resources to tackle increased instances of cyber and economic crime. It will, however, take more than additional resources to tackle these issues as the statistics continue to rise.
With the UK government’s plans to deliver ECP2 underway, it has also implied that there will be more robust measures included that will help deliver impactful results. But, will it be enough to save the 5,468 children that were victims of child trafficking this year alone (an increase of 9% compared to the previous year)?
Whilst there has been more recognition made of the effects of economic crime, there has not been enough action taken to prevent these deeply disturbing and increasingly recurring crimes that are committed as a result of fraud.
Technology could be the antidote
Technology is advancing at a rapid pace which unfortunately provides opportunities for fraudsters to be more inventive and destructive with their scams. This means that fraud can become more sophisticated, more distressing for victims and more financially devastating for businesses and for the UK as a whole.
However, technology could also prove to be the antidote to the fraud issue. Advancements in digital identity technology means people can now identify themselves online and only interact with others that have done the same and only if they want to. This safeguards users and restricts the ability of criminals to commit fraud online.
This technology exists and is being used in other countries such as Sweden. The nation launched its BankID in 2003 and it is now the largest electronic identification system in the country with a 94% usage rate among smartphone users with more than 6.5 million active users. It is owned and operated by several Swedish and Scandinavian banks.
Originally conceived as a way for consumers to log on to their online banking accounts, the system has expanded its scope as consumers increasingly conduct more transactions digitally. BankID is used for confirming online payments and even signing official documentation.
This technology is available in the UK and can protect tens of millions of UK citizens from fraud, reducing billions of pounds that are being stolen through fraudulent activity and used to fund dark crimes.
Enforcing and implementing a digital identity scheme would reduce fraudster’s ability to fund human trafficking, child abuse, kidnapping, drug trafficking and cybercrime.
The government must act fast and take action now, before more lives are lost, before more drugs are abused and more victims exploited.