Thursday, 27 January 2011

British government can only estimate true fraud level

Your free-thinking readers might find this difficult to believe, but, prior to 2010, the UK government officially had absolutely no idea how much money fraud was costing UK tax-payers each year. However, in view of the fact that numerous members of the UK parliament were recently caught ( by journalists, not the police) stealing from UK tax-payers by consistently fiddling their expenses claims, this chronic lack of official interest in fraud is hardly surprising .
Last year, with a token-few UK MPs, and former UK MPs, finally facing disgrace and prison terms for committing fraud, and with the UK public baying for blood, an 'executive agency' of the UK Attorney General's Office known as the 'National Fraud Authority' published the first 'annual fraud indicator report' for the period including 2009. This figure was £30 billions (i.e. £30 000 000 000, or thirty thousand million pounds). The NFA was ostensibly established in 2008, 'to take forward the UK government's response to fraud' - a typically vague use of the English language which can be taken to mean virtually anything (depending on who you are). That said, the NFA has just released its 'annual fraud indicator report' for the period including 2010
You will observe that the official estimated UK fraud figures have now climbed to a titanic £38 billions including £21 billions estimated to have been stolen from the public sector (i.e. tax-payers). Currently, fraud is costing each adult in the UK an estimated £765 per year. However, the NFA explains this apparent dramatic rise in fraud (almost 30%) by making the even more-alarming revelation that 'the first two annual fraud indicator reports cannot be directly compared, because some areas of fraud had been included for the first time this year.' It seems that huge numbers of UK citizens have found it effectively-impossible to report fraud, because the authorities (who are quite literally swamped with complaints ) have been refusing to recognize the full-extent of the problem, let alone tackle it. Indeed, a completely new agency, 'Action Fraud', has been established in the UK to try to receive, record and dispatch to the appropriate authorities all the public's complaints about fraud. Despite the agency's impressive name, even now, the NFA cannot say with any real authority what the true level of fraud is in the UK. The annual cost of fraud to the private sector in the UK during 2010 could only be estimated at a staggering £12 billions whilst charities apparently lost £1.3 billions. Individuals' losses were estimated at £4 billions from frauds. The amount of money individuals are known to have been cheated out of in the UK during the previous 12 months, ranges from £6 to more than £1 million. Most-common frauds were online shopping and auction frauds, and advance fee frauds. They involve people being asked to pay an unlawful upfront fee for goods (which don't exist) or effectively-valueless services like a 'psychic reading' or 'loan-arrangement fees' for 'loans' which are systematically refused. 'Romance' frauds are also common - where criminals win vulnerable people's trust and then persuade them to hand over their cash, property, etc. The NFA accepts that there are many more fraud victims than complaints, because people often feel too embarrassed to come forward. The NFA also reports that high-pressure sales techniques are being used to peddle worthless shares and 'miracle health products.' However, to date, there is no mention of 'MLM' or 'direct selling business opportunity' fraud, because most victims have been conditioned to blame themselves.
This year, Dr. Bernard Herdan, Chief Executive Officer of the NFA, said the authority's 'annual fraud indicator report' was only a 'blueprint' for work to tackle the 'rising tide of fraud'. He appealed for all UK citizens to make an effort to protect themselves and to share information on suspicious behaviour with the authorities. Dr. Herdan concluded by saying:

'We (the NFA) want to develop a stronger counter-fraud culture, which helps to disrupt fraudulent activity across the UK and globally.'

Realists might say that this UK agency is the regulatory-equivalent of trying to stop a herd of rampaging rogue-elephants with a pea-shooter.

David Brear (copyright 2011)

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