Cost of UK fraud soars

The cost of fraud in the UK hit a ten-year high of £942 million in 2005, up from £329 million the previous year.

Financial institutions suffered the biggest increase in fraud, increasing to £360 million from just £37 million in 2004, while the government lost £447 million – mainly through tax evasion and VAT and benefits fraud.

The rise in fraud has coincided with the strengthening numbers of professional gangs, who were responsible for £420 million worth of fraud, compared to insider managers and employees (£468 million).

"There has been a worrying boom in fraud in recent months, although the good news is that we know this because the fraudsters are being successfully brought to book," said Jeremy Outen, partner at KPMG Forensic, which conducted the research.

"Criminal gangs appear to be very active with aggressive stings, while in the private sphere internal frauds to fund excessive lifestyles or to pay off burgeoning debts shows no sign of abating. With both the number and the average value of frauds increasing, companies and individuals need to be more watchful than ever."

Identity fraud remains rife and has not been eliminated by new card security measures such as chip and pin, while and phishing scams are also on the rise. In one example of phishing, nearly £200,000 was stolen from 160 people who were enticed by a fake eBay site.

London and the south-east accounted for most of the fraud, paying a bill of £673 million. In contrast, Northern Ireland was hit by just £7.7 million worth of fraud.

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