In May 2015, the Metropolitan Police Commissioner Sir Bernard Hogan-Howe was accusing some of the largest British businesses of suppressing the true scale of fraud in the UK, to protect their balance sheets and basically preventing collateral reputational damage.
When addressing delegates from the FTSE 100 companies and other large companies at a meeting in the City of London, he was quoted as saying that their failure to report financial crime was leaving his officers in the dark about the state of the threat and the methods of attack. He added that it was unacceptable that businesses were only reporting 12 per cent of crime affecting them. This meant of course that 88pc of company fraud went unreported to the police. The delegates attending obviously knew the reasons behind this as we do in the private security industry. The Met chief went on to add that the true extent of online fraud remains difficult to assess and whilst many individuals involved report fraud to a bank, a report to the police does not always follow. Once again this often occurs in other areas of crime reporting.
NCA endeavour
Keith Bristow the head of the National Crime Agency (NCA) addressed the same delegates urging them to do more to tackle cyber-crime. He said his officers were overwhelmed with the sales of drugs and firearms on the dark net and with Russian gangs trying to defraud British citizens and businesses. He said that law enforcement cannot tackle these challenges alone and that to ensure the public is protected from new types of crime it is a shared endeavour. Anthony Browne, chief executive of the banking trade body the BBA told the same delegates that the banks are determined to protect customers and have highly sophisticated controls in place to safeguard the financial system as well as working with law enforcement to share key intelligence and raise public awareness.
Fraud figures
Against this background it appears the pressure is now on as we learned in March that the UK has seen an unprecedented growth in fraud; up by 26pc to £755m according to Financial Fraud Action UK (FFA UK). The figures are simply shocking as losses from phone banking fraud alone have also witnessed an explosion from £16.8m in 2014 to £39.3m in 2015. Internet banking fraud has gone up by nearly two-thirds to a massive £133.5m. Those who stepped forward in the interests of digital advancement and convenience, to embrace new banking facilities offered by the internet and mobile may be wondering how they got sucked into this vacuum of a fragmented security framework which will probably get worse. Remote banking fraud has increased year on year and one category ‘remote purchase fraud’, in which stolen details are used to make online or phone purchases rose by 20pc to £398.2m. Almost all other fraud categories saw double digit increases with the exception of contactless cards which totalled £2.8m against an overall spend UK wide of £7.7billion. Maybe the £30 limit imposed on the card spend was not attractive enough to the fraudster. It’s looking like those responsible for security will need to look at their systems to find a way to build a more connections to optimise processes to secure the way data information is captured, shared and managed.
How to protect yourself
In March 2016 the Met Police Commissioner was back, offering advice to victims. He was quoted as saying that fraud victims should not be refunded if they had failed to protect themselves such as not updating anti -virus software on their computers or keeping banking passwords safe. He added that the public were being rewarded for bad behaviour. Nothing said this time however to the institutions, telephone companies and internet service providers about bridging the gaps in their security and the risks associated with internet banking that threatens to undermine public confidence. The public will continue to write down or record their numerous passwords and PIN numbers despite the advice given not to do so. We have all been there, so don’t you say you have not.
Banking dinosaurs
I am not ashamed to say I am one of them as I still write out cheques every month. I check my bank statement each month ticking my cheque stubs and my cash machine withdrawals to ensure I am all in order with my banking. Every month I get offers to bank online and each time I visit my bank I get offers to have a chat with an adviser to improve my banking experience. Each time I refuse safe in the knowledge I have operated a system for over 50 years which has never let me down. Why is this? Quite simply I do not really trust financial institutions as they do not have customers’ interests at heart, only their own; and add to this, they are not all that competent, otherwise all this financial fraud would not be increasing year on year despite the efforts being taken to stop it. The pen appears to be mightier than the password, or the PIN number as the case may be, and I with my compatriot banking dinosaurs will take heart from one piece of fraud data. Cheque fraud is diminishing and even though this is probably due to the drop in cheque use forgive us if you catch us smiling. There were 5746 cases of cheque fraud in 2015 totalling £18.9m against £37.6m in 2012 involving 15,539 cases. The banking industry takes some credit for this however with their security measures. The available data on fraud indicates significant risk associated with online and telephone banking so I ask myself why would anyone expose themselves to this.
The final word
While the UK’s large businesses will no doubt continue to suppress information about being victims of fraud which may damage their long term reputations and financial status and we are asked to believe the myth that electronic banking is safer because criminals still prefer handling real money, we will continue to go through life feeling lucky if we have not been a victim to some kind of fraud even though a cashless society should make it more difficult for the criminal.
