Fraud level triples in a year

A surge in fraud cases in the second half of in 2005 resulted in over £900 million of fraud being recorded - up nearly three times from the previous year's £329 million.

According to the report from auditors KPMG, the Government remains the main victim of fraud (£447 million), largely through attempts at tax evasion, VAT and benefits fraud, but fraud against financial institutions – card fraud, identity fraud, false cheques - has spiralled dramatically, up from £37 million in 2004 to reach £360 million in 2005.

Around half of the frauds, £420 million, are carried out by professional gangs, but £468 million was the result of ‘insider’ fraud by management or company employees.

Partner at KPMG Forensic, Jeremy Outen, said: “There has been a worrying boom in fraud in recent months, although the good news is that we know this because the fraudsters are being successfully brought to book. Criminal gangs appear to be very active with aggressive stings, while in the private sphere internal frauds to fund excessive lifestyles or to pay off burgeoning debts shows no sign of abating. With both the number and the average value of frauds increasing, companies and individuals need to be more watchful than ever.”

Mr Outen said: “All too often, insider frauds are conducted over a period of months or even years without anybody noticing. It is often the most unassuming or trusted person that is perpetrating a fraud. Indeed, it is getting into a position of trust that can create the opportunity and temptation to steal in the first place."

The report revealed identity fraud continued to be rife, as fraudsters seek ways around the tighter controls introduced by such measures as chip and PIN.

‘Phishing’ scams on the internet remain a common way of obtaining people’s identities and bank details.

However, companies were urged to review their internal controls processes where appropriate, and make more use of some of the extremely sophisticated fraud detection software packages that have been developed.

The research, which for the last 16 years has considered major fraud cases, those totalling more than £100,000, being heard in the UK Crown Courts saw 222 cases reach court over the course of 2005, up from 174 cases in 2004.

(SP)