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The Value of Fraud

by accountingcpd

The average value of fraud has shown a significant drop over the last year, with figures down almost two thirds, from £2.1bn to £746.3 million, according to a report from BDO.

An optimist might look at these figures as evidence of the decline of fraud in the UK, but it's hard to deny that this is still a significant loss to be facing. It's also worth noting that this figure doesn't take into account the fact that only one in 50 cases of fraud are actually being reported.

So, what could be behind this sudden decline in value? Is it less fraud really being committed across the UK?

Despite the decline in value, the same BDO report – FraudTrack 2019 – states that there was only a slight decrease of 9% in the number of reports being filed, falling from 577 to 525.

But if the overall frequency of fraud has changed so little, why has the value seen this decrease? Could it be that the type of fraud being committed is shifting from large- to small-scale cases?

Fraudsters arguably now stand to gain more from a scattershot approach to get-rich-quick scams, instead of giving time to larger-scale fraud. And, in the age of social media, the generosity of the public has never been easier to abuse.

Take the recent conviction of Johnny Bobbitt and Katelyn McClure. They pleaded guilty to commit money laundering, by using the website GoFundMe to 'raise' more than £300,000.

Their fundraiser told a heart-warming story of a homeless man, who offered Katelyn money for petrol after her car broke down. Naturally, this story became a viral sensation.

Little time or planning was needed for this scam, and yet, by sharing their story on social media, they were able to steal a significant amount of money, in a short amount of time.

Let's not forget Billy McFarland, the subject of two recent documentaries covering the Fyre Festival scam. After defrauding investors of over $27.4 million, he was sentenced to just six years in prison, with his early release set for 2023. His co-founder, Ja Rule, was not convicted, and has since announced he is planning a similar event in the future.

The value of fraud has been increasing dramatically in charity and construction sectors, with the manufacturing sector also seeing a dramatic rise. Combine this with the fact that areas such as Yorkshire are seeing a value increase of more than 50% over the past year. Time will tell, and it might take the numbers some time to catch up to the reality, but it seems that it is the type of fraud being committed which could be seeing a change, rather than the frequency.

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