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Involve digital and retail businesses in taskforce for combatting online fraud, says NAO

Out-Law News | 03 Jul 2017 | 5:12 pm | 3 min. read

Businesses in the retail and digital sectors should be involved in a Joint Fraud Taskforce to help in the fight against online fraud, the UK's National Audit Office (NAO) has said.

The Joint Fraud Taskforce was set up in 2016 to bring together government, industry and law enforcement in a bid to address growth in online fraud cases.

However, the NAO said (50-page / 579KB PDF) the taskforce has "too narrow a focus on banking" and that its membership should be expanded "to include other stakeholders, such as the retail and digital sectors".

"At present, only banks represent industry on the Taskforce," the NAO said. "However, many other organisations, including those in the retail, telecommunications and digital sectors, have responsibilities for preventing and reducing online fraud."

In its new report, the NAO said that more could be done to combat online fraud in the UK. It criticised the quality of data available about it and added that a lot of cases of the crime goes unreported. It also said that some police forces do not give tackling online fraud sufficient priority and that banks' response to such crime is "uneven".

"Banks have an important role to play in protecting customers against fraud," the NAO said. "However, the protection banks provide varies, with some investing more than others in customer education and anti-fraud technology."

According to the NAO, fraud is now the "most commonly experienced crime in England and Wales" and that "most happens online". It said at least 6% of adults in the UK experienced an incident of fraud in the year to 30 September 2016.

"For too long, as a low value but high volume crime, online fraud has been overlooked by government, law enforcement and industry," Amyas Morse, head of the NAO, said. "It is now the most commonly experienced crime in England and Wales and demands an urgent response."

"While the [Home Office] is not solely responsible for reducing and preventing online fraud, it is the only body that can oversee the system and lead change. The launch of the Joint Fraud Taskforce in February 2016 was a positive step, but there is still much work to be done.  At this stage it is hard to judge that the response to online fraud is proportionate, efficient or effective," Morse said.

Civil fraud and asset recovery specialist Alan Sheeley of Pinsent Masons, the law firm behind Out-Law.com, said: "It is clear that the landscape within which businesses and individuals operate and communicate has changed in recent times. Unfortunately, this has led to a climate of widespread online fraud in England and Wales, as the report shows. The report sends a clear message that not enough is being done by the relevant authorities to address the changing face of crime and tackle online fraud. The focus for some local police forces is elsewhere – for example only 27 out of 41 police and crime commissioners referred to online fraud in their police and crime plans as at April 2017."

"On top of this, even if the prevention of online fraud is a priority for some local police forces, the recovery of victims losses resulting from online fraud is often not a focus. The report reveals that approximately £130 million of funds held in banks cannot accurately be traced and returned to fraud victims," he said.

"The relevant authorities should be going further to tackle the prevalence of online fraud. The variety of agencies and stakeholders involved in addressing online fraud causes difficulties for effective governance, accountability and performance measurement. It is important therefore that there is a mandatory obligation on government agencies to report statistics to a single designated body. Further, mandatory intelligence sharing between the relevant authorities would assist in plugging the 'intelligence gaps' identified in the report," Sheeley said.

"Consideration must also be given to the outsourcing of the recovery of the proceeds of online fraud to the private sector. The relevant agencies need to make the recovery of victims’ losses a priority. If they are not resourced to do this, the private sector can assist. Specialist civil fraud and asset recovery teams have the expertise and resources to increase recovery rates for the victims of online fraud, such as through obtaining worldwide freezing orders and disclosure orders which significantly improve a victims chances of tracing and recovering misappropriated monies," he said.