Accounting firm BDO also cautions about the future impact of fraudsters utilizing artificial intelligence to deceive customers
In 2023, the UK saw a significant rise in fraud, with the total reaching £2.3 billion, making it the second-largest year for scams in the last twenty years. A report also highlighted the future threat of fraudsters exploiting artificial intelligence to deceive consumers.
The latest FraudTrack report from accounting firm BDO revealed an 18% increase in reported cases, reaching a three-year peak. Additionally, high-value cases exceeding £50 million surged by 60% compared to the previous year, with half of these cases involving frauds exceeding £200 million.
BDO attributed the overall increase to several factors, including the rise in online scams, phishing, system breaches, and authorized push payment (APP) transactions. In APP transactions, fraudsters deceive individuals into transferring money to them.
“Analysis of the data from the past decade reveals a rising trend in reported fraud cases with increasing amounts involved,” said Kaley Crossthwaite, a partner at BDO. “We anticipate this trend to continue. Unfortunately, fraudsters are likely to exploit new avenues like AI to stay ahead.”
UK banks have issued warnings about “an epidemic of scams.” Barclays reported that over 70% of scams occurred on social media, online marketplaces, and dating apps last year.
London and the southeast of England remained the largest fraud hotspot, experiencing a 170% year-on-year increase in value due to several high-profile cases, along with a 43% rise in reported cases.
Significant cases in the previous year included Entain, the owner of Ladbrokes and Coral betting chains, settling with HM Revenue and Customs for £585 million over alleged bribery at a Turkish business it owned.
Former Formula One boss Bernie Ecclestone pleaded guilty to fraud for not declaring over £400 million of overseas assets to the UK government, agreeing to pay HMRC £652 million.
The East Midlands, rising from 12th place in 2022, reported the second-highest level of fraud.
BDO noted that the actual extent of fraud was probably much higher than £2.3 billion, as statistics from the Crime Survey for England and Wales indicated that fewer than one in seven offenses are reported to the police.
A report from last year highlighted a surge in individuals committing “harmless” fraud, like evading council tax or attempting to recover lost gambling bets, amidst the cost of living crisis.