WPI Economics and Cifas report tackles scourge of first-party consumer fraud

Cifas, the UK’s leading fraud prevention service, has released a report prepared in conjunction with WPI Economics showing that one-in-seven (14%) British adults have committed one or more types of consumer fraud, while two-in-three (66%) know someone who has done so.

There are many types of first-party fraud, including fronting, de-shopping, money muling and claimed non-delivery Fronting is about setting up a service in someone else’s name to save money (for example, young drivers taking out car insurance under their parent’s name, nominating themselves as a named driver). De-shopping is concerned with buying items (usually clothing) with the intention of using/wearing them before returning them for a full refund.

Money muling is agreeing to transfer illegal funds to a third party from a bank account, with the individual doing so generally keeping a share for themselves. Claimed non-delivery is focused on ordering goods online and falsely claiming they haven’t been delivered to obtain a refund.

The most common type of consumer fraud committed by the British public is fronting (6%), closely followed by de-shopping, which one-in 20 (5%) respondents admit to carrying out.

Alarmingly, many Britons consider some types of consumer fraud as reasonable, with the highest proportion (39%) seeing fronting as reasonable. However, the consequences of committing this type of fraud could see individuals driving without valid insurance and, in some cases, resulting in a criminal record.

Interestingly, money muling is considered reasonable by one-in-five (22%) Britons, the consequences of which could result in individuals being unable to open a bank account and obtain a mortgage, not to mention a potential prison sentence for the perpetrator.

The research revealed that younger people were more likely to take part in fraudulent activity, with 21% of 18-34 year olds admitting they’ve committed first-party fraud compared to only 6% of people aged over 65.

Prosecution over prevention

The report finds that companies are more likely to invest their energy into detection and prosecution of consumer fraud rather than prevention. This is despite the fact that detection can be problematic, while prevention is generally regarded to be more effective.

The report argues that efforts to reduce fraud would be better directed towards awareness campaigns focused on educating consumers about different types of fraud and their consequences, such as criminal records, fines or difficulties in obtaining banking and credit facilities.

Mike Haley, CEO of Cifas, stated: “It’s surprising how common fraud is among British consumers and – perhaps even more worryingly – accepted by so many people. The consequences of committing ‘harmless’ frauds such as buying shoes to wear for a night before returning them, or adding their parent as a main driver for cheaper insurance can be potentially life-changing and, in some cases, result in a criminal record. Businesses and consumers have a responsibility to raise awareness of the consequences of committing fraud. Retailers and service providers are in a unique position to do this using their brand authority and established communication channels.”

Matthew Oakley, director of WPI Economics, added: “It’s shocking that one-in-seven British adults admit to having committed first-party fraud. That many people also see this as reasonable highlights the lack of understanding of fraud as a criminal and harmful act. This report shines a light on some of the routes to people committing fraud and highlights how industry can work together to tackle them, in particular by making sure that fewer people see fraud as reasonable and that the opportunities to commit fraud are reduced.”

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.

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