By Lovro Persen, Director Document Management and Fraud, IDnow
The UK has for too long been ranked as the fraud capital of Europe, with Britons nearly nine times more likely to be victims of scams than their counterparts in Germany. Finally it looks like the government is taking steps to change that.
Given that the UK loses almost £3 billion a year to fraud, the only surprise is that it’s taken so long to make the progress that has begun with its new fraud strategy, which was published in May. It has the target of reducing fraud by 10% within the next two years, with £100m of additional funds earmarked to make this happen.
But how did the UK get into this situation and how is it planning to get away from its reputation as a soft touch for fraud? Partly it’s because English is the lingua franca for crime, while the country’s relative wealth and fast and frictionless payment systems have also made it a popular target.
Card fraud affects almost one in five Brits and each incident costs an average of £8,833.20, which is almost £3,000 more than the cost of similar crimes in France, for example. Fraud as a whole amounts to 40% of all crime in the UK, but its law enforcement services dedicate less than 1% of their resources to tackling it.
Taking on the fraudsters
This new fraud strategy is looking to fix that, starting with establishing a National Fraud Squad of 400 specialist investigators. The government is also looking to the tech community to do its part through commitments to protect their customers and make it easier to report fraud as well as taking down fraudulent websites.
But will all of this make a dent in the UK’s thriving fraud industry? It’s a step in the right direction for sure, but its success relies on collaboration between invested parties and for businesses to step up and take responsibility in ways that simply haven’t happened so far.
There’s no silver bullet for fighting fraud, it’s something that manifests at every step of the customer journey online and those responsible are constantly finding new and innovative ways to convince people to hand over their money.
Between deepfake videos and spoof texts that pretend to be from banks, it’s becoming harder and harder for consumers to know what’s genuine and what is fraud. Meanwhile, huge amounts of data are stored online, making everyone ever-more vulnerable to data breaches. But while technology can be a curse when it comes to tackling fraud, it also has the potential to be a solution to the problem.
Using technology to fight fraud
Know Your Customer (KYC) processes are crucial for businesses to protect their customers – and themselves – from fraudsters. They can ensure that the power of identity is put back in the hands of the people it belongs to and the businesses they are trying to interact with.
Partly due to banks stepping up controls, and implementing better and more secure KYC processes, there was an 8% reduction in the total amount stolen in 2022 (£1.2 billion) compared to 2021 (£1.3 billion). This was due to a significant decrease in unauthorized fraud.
The fight against fraud doesn’t have to mean painstaking and lengthy transactions either, because the technology is there to provide smooth, streamlined, fully compliant and safe online customer journeys.
Governments and businesses need to go beyond what is required of them in terms of regulations and legalities and the tools are now in their hands to do so without worrying about affecting the customer experience.
Combining this with a more resolute approach from the government – of which the Fraud Strategy is a positive first step – will mean that the UK can finally do more to protect its citizens from falling victims to online fraud.
