In tandem with chartered accountant and business advisors MacIntyre Hudson LLP, the researchers interviewed victims of frauds ranging from those who had been sold a fake holiday to those who have lost a lifetime’s business and their entire pension pot.
While the types of fraud and amounts of money blost were found to vary widely, the effects are almost uniform: victims feel embarrassed and angry when they have been defrauded, and most say they will never again trust anyone but themselves.
Commenting on the research findings, Dr Mark Button – the director of the Centre for Counter Fraud Studies and a reader at the University of Portsmouth – explained: “Given the common assumption that fraud is a victimless crime, and after having published several reports illustrating the financial costs of this type of criminality, we felt it was important to show the devastating impact it can have upon ordinary people.”
Fraud: a pernicious problem of the worst kind
The report’s o-author Jim Gee – director of Counter Fraud Services at MacIntyre Hudson LLP and chairman of the Centre for Counter Fraud Studies – added: “Fraud is a pernicious problem. Its costs are social, financial and personal. At a society-wide level, it corrupts human interaction and undermines good behaviour. At an organisational level, it undermines the financial health and stability of companies and public sector agencies which we rely on to enjoy a proper quality of life.”
Continuing the theme, Gee stressed: “At a personal level, fraud causes real damage to the health and wealth of those who are its victims. This report exposes that serious human cost.”
The Centre for Counter-Fraud Studies was commissioned to conduct research on fraud by the National Fraud Authority and the Association of Chief Police Officers. The researchers then decided to highlight the human cost of fraud – the so-called ‘victimless crime’ – by collating the transcripts of interviews with victims.
Dr Button explained: “One of the striking myths about fraud is it has less impact than some other crimes. This is wrong. Fraud has a devastating impact on victims and their families.”
What can happen to the innocent victims
One victim, the owner of a small design business, said that being targeted by a fraudster was like being stung by a mosquito then finding out you had malaria.
He’s 59 years old and was within reach of retirement when a senior member of staff, hired to help him grow his business, defrauded his company and left him on the verge of bankruptcy.
The interviewee said: “The woman who defrauded my company is pure gold-plated evil. She knew how to take us for everything. She was so good she effectively made the fraud vanish from the books. Not even the official receiver could bring her to account. The police said there was nothing they could do. She was untouchable.”
The man continued: “What she did was dreadful, but it’s even worse knowing she is still out there and she will likely be defrauding someone else now in the very same way. For 14 months, I couldn’t sleep for more than two hours at a time without waking up.”
The interviewee told the researchers: “My company was worth GB pound 650,000 when she started with us. Within just 14 weeks we were not even worth GB pound 35,000. It had all gone. The thing is, in business if competitors or suppliers know you’ve been had over they circle like sharks. They smell blood in the water and they’ll exploit your weaknesses. They see an opportunity and, for example, will withhold vital funds.”
Fraud: it “smashes into your life”
“On a human scale, fraud smashes into your life and destroys it. My wife and I took 31 years building the reputation of our business and our name. In the end it was the only thing that saved us. One customer who knew us well took the risk of trusting us and gave us a single order. It was the only order we’d had for months. It saved us and allowed us to start rebuilding the company.”
“Until you’ve been done over you don’t have a clue. I don’t trust anyone now.”
“In business you sometimes take sensible, calculated risks, but the fact I didn’t spot her evil work is frightening. You lose faith in your own ability. It’s tragic. I always used to back my own people, I was a loyal employer and hoped they would repay that with loyalty, but for some reason this woman wanted to ruin me.”
“I think what the Centre for Counter Fraud Studies is doing to highlight the real cost of fraud to individuals is really important if we are ever going to change things in this country. Changing the tax system would be a start.”
“Despite us being the victims of fraud, it is us who are disadvantaged. It is our name and reputation that’s associated with failure in the marketplace, not the fraudster’s name. It’s our future business revenue which has been lost. We cannot get a business overdraft, we cannot get credit cards. This one incident of fraud has pushed us into over 75% mortgage on our home as we approach retirement age.”
Estimates on the number of victims
There’s no credible estimate of the number of individual victims of fraud each year, but it’s estimated that 3.7% (1.8 million people) fall victim to identity theft in the UK each year.*
According to figures from the Office of Fair Trading, one e-mail scam persuaded 70,000 people a year in England to part with an average GB pound 2,858 each*. About 38,000 people in England fall victim to fake prize draws every year, while fake lotteries draw in 14,000 victims per annum.*
As if that little lot weren’t enough, a ‘work from home’ scam where an advertisement in newspapers asks for a fee up front to help establish people in business affects 330,000 people in England every year.*
(*Source: Centre for Counter Fraud’s earlier studies for the NFA and ACPO)
Additional fraud reports and further information
MacIntyre Hudson LLP and the Centre for Counter Fraud Studies have previously published three reports on the financial cost of fraud:
Click the link on the right hand panel of this page for details
If you would like to find out more information on the work of the Centre for Counter Fraud Studies and/or MacIntyre Hudson, again dedicated links are provided on the right hand panel of this page
