Justice response inadequate to meet scale of fraud epidemic

It says fraud prevention, investigation and prosecution has “too often seemed like an afterthought”.

In a report into fraud and the justice system published on Tuesday (October 18), the committee calls on the Government to “revolutionise” the way in which fraud is tackled, ensuring it is given greater priority and resourcing across the justice sector to boost prevention, investigation and prosecution alongside improving the treatment for victims of this crime.

The committee found that the level of focus from policing is inadequate to deal with the scale, complexity and evolving nature of fraud.

Only two per cent of police funding is dedicated to combatting fraud despite it accounting for 40 per cent of reported crime, it said.

The report says “lines of accountability are confused”, with responsibility split between local and national forces.

It adds: “Action Fraud has proven itself unfit for purpose and while a replacement reporting system is expected in 2024, victims should not have to wait this long to see improvements in the service they receive.”

The report calls for a victim-focused approach that ensures that people know where to report cases of fraud, and are kept up-to-date and supported as criminal investigations progress.

It says officers should receive sufficient training to ensure they can identify and respond to fraud, particularly fraud within the online sphere.

“The lack of focus on fraud is further illustrated by the failure to record data on this form of crime at a local or regional level,” the report adds.

The committee wants to see data on fraud crime to be collected and published in sufficient detail to allow for law enforcement bodies to be held accountable for their performance in relation to fraud crimes.

In addition to a lack of investigation of fraud crimes, the report found there is also a lack of prosecution.

“The Office for National Statistics (ONS) estimates that there are around 4.6 million fraud offences each year, but in the year ending September 2021 just 7,609 defendants were prosecuted for fraud and forgery as the principal offence by the Crown Prosecution Service,” says the Justice Committee.

“Our inquiry heard of significant delays in hearing fraud cases, problems with the application of disclosure rules in cases with large amounts of digital material and the importance of early engagement between all bodies involved in order to conclude cases in a timely manner.”

The committee recommends that sentencing guidelines should take into account not just the level of financial loss resulting from a crime but also the emotional and psychological harms these crimes can cause.

Work to prevent fraud from taking place also needs significant improvement, it says, adding: “The Government should continue to work with key stakeholders, particularly telecomms, tech and social media companies, who need to do more to prevent their platforms from facilitating fraud and develop a common approach to online crime prevention.

“A new criminal offence for ‘failure to prevent’ should be introduced to ensure companies are held to account for criminal activity their business facilitates.”

Chair of the Justice Committee, Sir Bob Neill MP, said: “A week ago, it was announced that it is a now a key priority for police to attend every burglary reported to them.

“It is right that victims of such invasive and traumatic crime should know that they will be supported, but we should not underestimate the impact that offences of fraud also have upon victims.

“Fraud currently accounts for 40 per cent of crime and the figure is growing. People are losing their life savings and suffering lasting emotional and psychological harm. But the level of concern from law enforcement falls short of what is required.

“The decision has already been made to replace Action Fraud, and the Government will need to make sure its successor can meet the demands placed on it, but  wider criminal justice system must also renew its focus on this crime.

“Fraud prevention, investigation and prosecution too often has seemed like an afterthought, last in the queue for resources, monitoring and even court time.

“We need the criminal justice system to have the resources and focus to be able to adapt to new technologies and emerging trends. The current sense of inertia cannot continue, we need meaningful action now.”

Key conclusions and recommendations from the report.

Fraud in England and Wales

There is currently an epidemic of fraud in England and Wales. The number of cases has grown steadily over the past decade and accelerated rapidly to unprecedented levels during the pandemic. This trend has shown no sign of abating as the country returns to normal life.

Around 875,000 cases are reported each year, however the ONS has estimated that the real number could be as high as 4.6 million. 40% of recorded crime is now fraud and is calculated to cost society £4.7 billion a year.

It is a form of crime that is constantly evolving, with 53 per cent of fraud is now believed to be facilitated by internet technologies.

Policing response

Despite accounting for around 40 per cent of recorded crime, fraud is not treated as an investigative priority by the police. Only two per cent of police funding and only 380 out of the Government’s target of 20,000 new police officers will be dedicated to tackling fraud. Lines of responsibility are also confused, with local forces carrying out investigations but national bodies, including the City of London Police and the National Economic Crime Centre, setting the overall approach to combatting fraud.

The Government must allocate adequate funding that will enable police forces to enable prevention and enforcement sufficient to match the scale of fraud taking place in England and Wales. There should be greater clarity on the areas of responsibility between national and local policing bodies, and greater awareness of the support available to local forces on fraud cases.

Data collection on fraud is inadequate and needs to improve. Fraud statistics are not included in local or regional performance data making it impossible to assess performance and identify failings. Fraud should be made a strategic policing requirement and performance data should be published at local and regional levels.

The current focus on traditional forms of crime has left officers ill-equipped to identify new and emerging forms of fraud that utilise modern technologies. The College of Policing should conduct a review of the training offered to frontline staff to ensure it reflects the changing crime landscape and the technologies it exploits.

Ministerial responsibility

At present the response to fraud does not match the scale and complexity of the crime. At a ministerial level, it sits within the purview of the Minister for Security. However, the committee finds that responsibility for fraud and other forms of economic crimes should be within a ministerial portfolio that would treat this form of crime with the priority it deserves. It should work to bring together different areas of government and private companies to create a unified approach to tackling fraud. This would also help to give the issue more visibility as well as political ownership and accountability.

Support for victims of fraud

Fraud can have a devastating and long-lasting effect on victims who not only have to deal with financial losses but the emotional and psychological distress. Support for victims of fraud is inconsistent across the country and many victims do not know how to report the crime.

Not all forces currently have victim care units and there is no national mandate for these to be in place or minimum standards for victim care. The Government should establish national standards for the standard of care that a victim can expect to receive when they report a case of fraud and ensure that all forces are working with victim support units by the end of 2023.

Action Fraud

Action Fraud, the national reporting centre for fraud and cyber-crime, is not sufficiently resourced to deal with the growing and varied challenges it faces. Current plans will see Action Fraud replaced with a new reporting service in 2024 but victims should not have to wait this long to receive the support they need.

Sufficient staffing needs to be in place to ensure that Action Fraud, and its successor, are able to provide a high-quality service to victims, ensuring they are kept up to date with the progress of their case and directing them to support services if required.

The Committee is also concerned that the Government’s proposed successor to Action Fraud may focus on its technology systems and the techniques for investigating crime, without giving adequate attention to the experience of those using the service. It calls on the Government to focus on victim experience and ensure that there are sufficient numbers of trained staff to understand their needs and vulnerabilities.

Prosecution

Fraud cases can often be lengthy and complex. There can also be significant delays in coming to trial as they are not seen as a priority for listing, this has been further exacerbated by the backlog in the court system. The Government should consider working with the judiciary to develop pilot economic crime courts. These would ensure that cases are overseen by judges with the right skills to address the specific challenges of fraud and economic crime cases. If successful, these should be rolled out across the country.

Further problems arise due to the volume of data involved in fraud cases. Current disclosure rules can result in significant amounts of police and prosecution time being spent redacting and disclosing evidence that that turns out to be unnecessary to the case at trial. The Attorney General should review current guidelines and consider introducing specific guidance on how disclosure legislation should operate in cases with significant amounts of digital material.

Current sentencing guidelines in fraud cases fail to recognise that the loss of small sums of money can have a significant emotional and psychological impact on the victim. Sentencing guidelines should be amended to give greater consideration to the harms caused by fraud crimes alongside the financial losses incurred.

Prevention

The most effective way of combatting fraud is to prevent it from happening in the first place. The Government should ensure that the public and private sectors work together to reduce fraud. The relaunch of the Joint Fraud Taskforce is welcome and should provide a valuable forum for stakeholders to discuss a common approach to combatting fraud.

Telecommunications and tech companies have a central role to play by designing fraud out of their systems and stop the continued growth of online fraud. The Government should put in place a charter setting out the commitments and responsibilities of these companies in relation to tackling fraud and allow them to be held to account for their performance in this regard. The Government should also introduce ‘failure to prevent’ offence for failing to stop fraud being perpetrated using a company’s platforms. This would allow companies to be held to account for how their systems are exploited by criminals and encourage better corporate behaviours.

There are concerns that current GDPR legislation may be perceived as preventing companies from sharing information and intelligence across sectors where fraud is taking place, thereby allowing criminals to easily move from platform to platform. The Government should examine how data sharing-legislation operates with regard to tackling fraud and bring forward solutions to overcome these barriers.