One-fifth of UK businesses hit by fraud, Home Office survey shows

One in five UK companies fell victim to fraud between 2018 and 2020 but the majority did not report it to the police, according an extensive government survey of thousands of businesses.

The report by the Home Office, which was written in 2020 but published only last week, examined incidents of fraud experienced by companies in seven business sectors covering 20 per cent of all industry in the three years to 2020.

In that time, the number of fraudulent incidents per company ranged from a low of one to a high of 5,000 for one group in the wholesale and retail sector, and the average cost per business was about £16,000.

“Across all [surveyed] business sectors, the incidence rate for any fraud in the 3 years prior to interview was approximately 3,917 incidents per 1,000 businesses, suggesting high levels of repeat victimisation,” the Home Office said.

The Home Office extrapolated the data to conclude that all of the companies in the seven industries — including retail, construction and financial services — would have suffered about 4.5mn incidents of fraud between 2018 and 2023.

The economic crime survey found substantial under-reporting by companies, with only 32 per cent reporting their most recent experience of fraud to the police and only 25 per cent to Action Fraud, the national fraud reporting service.

Fraud against individuals is now the most common crime in Britain, with 3.7mn incidents recorded in the 12 months to September last year.

The Home Office said it had conducted its survey of companies because “less is known about the scale of fraud against businesses”, since so many financial crimes go unreported.

Although it took place in 2020, the poll was not published until last Wednesday, the same day the Home Office released a new fraud strategy.

Emily Thornberry, shadow attorney-general, has written to home secretary Suella Braverman to ask why the strategy did not include data on the value of company losses to fraud and the hundreds of thousands of business frauds going unrecorded by police.

In a letter seen by the Financial Times, Thornberry said the decision to exclude such significant figures from the fraud strategy was “inexplicable and unjustifiable”. She added that they would have been even higher had the survey included all other industries and not “sat in a drawer for three years”.

In 2017, an independent “Annual Fraud Indicator” produced by private companies and academics estimated that the UK’s annual losses from fraud were up to £190bn, of which £140bn was suffered by the private sector — mainly through procurement fraud and payroll fraud.

Thornberry said it was “astonishing” that last week’s 22,000-word fraud strategy did not mention either procurement or payroll fraud.

“It is conceivable that . . . the decision was taken — consciously or otherwise — to downplay or downright ignore the offences and losses suffered by businesses, in order to focus more narrowly on the impact of fraud on the general public,” she said.

The Home Office said it was “absolutely committed to cracking down on scams” and that it continued “to work intensively with partners across government, law enforcement and industry to protect the public and businesses from fraud”.

People with knowledge of the research said that, since the survey was not a sample survey, it had not been used to create a national estimate of the total cost of fraud to businesses. They added that there were plans for a follow-up survey over the next year, which would cover all sectors.

Separately, research by trade body UK Finance on Thursday showed that almost all authorised push payment fraud, in which victims are tricked into transferring money to accounts whose owners are not who they claim to be, originated either online or via phone.

Proposals that would have forced Big Tech and telecoms companies to compensate victims were watered down before the fraud strategy was published, after concerns were raised in government about the impact on the sectors.

David Postings, UK Finance chief executive, said tech companies “should really be putting their hands in their pockets [to contribute towards stopping fraud], particularly as they profit from it”.

Antony Walker, deputy chief executive of techUK, which speaks for the tech sector, said companies “already take a wide range of active measures to prevent fraud” and would work with others to deliver on the fraud strategy.