First-Party Frauds Are On The Rise In UK Amid Cost-of-Living Crisis: Report

Evasion of council tax or reimbursement of money on lost gambling bets and more are on the rise in the UK amid the cost of living crisis. Research has found that the crisis has led to a rise in “first-party fraud” where a growing number of people are giving false information, or misrepresenting themselves to make money, per a Guardian report.

What are the common offenses?

The survey conducted by the fraud prevention service Cifas revealed that the most frequent offenses were claiming for a single person’s discount on council tax, and gambling chargeback fraud, where people claim money on legitimate lost bets from the bank. As per the survey, only one in 12 people claimed to have committed one, or more of such first-party frauds in the previous year, but it has now risen to one in eight.

What are the other first-party frauds?

Serpil Hall, head of fraud prevention at D4t4 Solutions, a technology firm that deals with fraud and scams, said that the increase in first-party fraud could be a result of the combination of “desperation and perceived ease”, as per The Guardian report.

As per the report, it is evident in the case of chargeback fraud, or “friendly fraud”, where money is claimed back from a bank on items bought online. People are claiming that they did not receive the goods, even though they did, and are asking for a refund.

Hall added that chargebacks were designed to protect the consumer allowing them to dispute unauthorised transactions or cases of fraud. However, individuals are exploiting the system for personal gain.

The Cifas survey also found a large acceptance of frauds such as asset conversion, where a vehicle bought on a finance agreement is sold before the end of the loan. Other frauds committed by a significant number of people were “money mulling” and falsifying a CV.

More serious issues

The Guardian report indicated that a growing number of people aged in their 50s and 60s were acting as “money mules” letting their bank accounts be used to move money illegally.

Mike Haley, chief executive of Cifas, said that a fifth of the respondents of the survey felt that it was a reasonable fraud. However, this can lead to becoming part of organised crime fuelling a plethora of illegal activities, Haley warned.

Scale of Fraud

The UK Finance in its Annual Fraud Report 2022, said that over £1.2 billion (approximately $1.5 billion) was stolen by criminals through authorized and unauthorized fraud in 2022. The banking trade association UK Finance said criminals stole £580m in the first six months of 2023, suggesting that the households could lose more than £1bn to fraudsters in 2023 as well, The Guardian reported.

Consequences

Haley said that people committing the first-party frauds may feel that they have no way to avoid it due to the pressures of the cost of living crisis. However, they could face severe consequences like having their bank accounts closed, getting banned from accessing financial products and credit, or in some cases even having a criminal record.

Haley expressed that Cifas wants more to be done for the education of the public about the serious consequences of committing fraud and to fix the perception that first-hand fraud is a victimless crime.