Insurance fraud is risingThe barometer identified a general rise in the value of insurance fraud over the last 12 months. According to the findings, some £17 million pound’s worth of alleged insurance fraud appeared in UK Courts last year. This marks a significant rise in cases compared to 24 cases that had a combined value of £11.9 million during the years 2014 – 2017. But what are the most popular examples of insurance fraud in the UK today? The research identified a number of popular “bogus claims” including fake car crash claims, personal injury scams, and even faked death claims that were growing in prevalence within British courts. “Despite the progress that has been made, particularly with the number of people now using in-car technology to record events in real time, fraudsters will still continue to come up with new and improved ways to scam the insurance system. Like many areas of fraud, insurance fraud has turned into a very lucrative income stream for professional criminals.” – James Maycock, KPMG
Fraud in the building industry rises in numbers, and valueThe research also revealed a rise of “rogue tradesmen” committing fraud. Whilst fraudulent repairmen (including a number of builders and roofers) in the past usually committed crimes largely below the £100,000 threshold, the average value is now rising, and rising sharply. In 2018, KMPG discovered that there were 18 fraudulent tradesman cases with a value of £7m, where mostly elderly homeowners were the target. “Whilst many fraud attacks take place with a perpetrator behind a computer screen who never actually gets to meet a victim, frauds by rogue traders are done very much face-to-face, where the fraudster will often meet or be welcomed into the home of their victims. It is often elderly people who are targeted, many spending their life savings on sub-standard, dangerous work that never gets completed,” adds Maycock. “There are things people can do to protect themselves and their vulnerable friends and relatives from rogue tradesmen, particularly never parting with money up front, not welcoming uninvited callers into homes (even if they have ‘spotted’ something that needs fixing), and asking for ID and checking if they are registered tradesman,” he continues.
Customs fraud rises as Brexit loomsAccording to the research, some £89 million pound’s worth of duty evasion was recorded in 2018. This was the highest value ever recorded where fraud cases relating to tobacco products doubled. Other common goods being smuggled across the border included counterfeit pharmaceuticals and pirated digital media.
“How Brexit will impact fraud levels is yet to be seen, but new systems and new landscapes, such as new tax and customs arrangements, have in the past opened new and lucrative loopholes ripe for the picking from unscrupulous criminal gangs and businesses looking improperly to cut their costs.” – James MaycockKnown as “carousel” frauds, these are forms of cross-border frauds that take advantage of a change in multi-jurisdictional tax laws. These, according to the research, have been one of the biggest drivers of fraud recorded in the UK over the past three decades since the Fraud Barometer has been in existence. These illicit activities have cost the UK public finances an estimated £25-30bn over that period. With Brexit drawing ever near, it’s certainly a legitimate concern that this issue could get worse. Why? Because, with new customs arrangements potentially coming into play post-Brexit, there is the possibility for professional criminals and misguided businesses to exploit or abuse untested technology or tax collection mechanisms for their own gain. So go forth SMEs, and be digilent this year…
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