Moving Toward a New Fraud Ecosystem

Stefanie Hallgren

ACFE Public Relations Specialist

The fraud reporting system in the U.K. is broken, and there needs to be a fundamental change in the process of reporting cases, thus creating “one fraud ecosystem” that keeps victims a major priority. That’s the message Nick Downing, Director of Deloitte Forensic, was hoping to get across in the session titled “Resetting the Dial: Transforming the Fraud Reporting and Response Ecosystem, Sponsored by Deloitte” at the 2023 ACFE Fraud Conference Europe.

To say Nick Downing is passionate about fraud would be an understatement. He has an extensive background in fraud investigation and prevention, having spent 30 years in law enforcement, eventually rising to the rank of Assistant Chief Constable, Head of Serious, Organised and Economic Crime for Kent and Essex Police. He also spent time as part of the executive team at CIFAS — a U.K. non-profit organization that works to reduce and prevent fraud and other financial crimes — as well as being part of the U.K. Leaders in Fraud Prevention.

So, why are changes needed for the fraud reporting landscape? Downing said it’s because the occurrence of fraud continues to rise in the U.K. He cited 40% of all recorded crime across the U.K. is fraud-related, and it costs the U.K. economy about GBP 130 billion per year. He says frauds are costing taxpayers anywhere from GBP 29.3 billion to 51.8 billion. Beyond the numbers, Downing says fraud has other lasting effects, including emotional damage to victims and reputational damage to major corporations. He fears that a majority of fraud cases (85%) are not being reported, while fraudsters continue to stay “ahead of the game,” getting cleverer in their tactics.

On a positive note, Downing believes conditions are ripe for changes to be made to fraud reporting systems. In the U.K., the government is making fraud fighting a priority, including establishing the new Public Sector Fraud Authority (PSFA) that was launched in August 2022. According to its website, the PSFA “works with departments and public bodies to understand and reduce the impact of fraud.” There are also some regulatory changes that are happening within the U.K. government.

For all the changes to the fraud reporting landscape to be successful, Downing believes three things should remain at the forefront: victim experience, the policing response and information sharing. For example, for an anti-fraud public education campaign to work, Downing says “the public needs to understand the impact of fraud on individuals and communities.” For fraud investigations and prevention to be successful, Downing believes all fraud and cybercrime resources should be combined under one agency. In regard to information sharing, Downing said “the proactive sharing of information and intelligence between public and private sectors is critical.”

Elaborating on the impact of fraud on victims, Downing presented some effects victims said they experienced post-fraud, ranging from financial (e.g., credit rating was affected, loan had to be taken out) to emotional (e.g., stress or anxiety, difficulty sleeping, thoughts of self-harm). Downing said one of the ways that victims could be helped was by simplifying the fraud reporting experience, because victims often aren’t sure where to report fraud. He also asserted that the embarrassment and reputational impact of being a victim of fraud should be reduced.

“We have got to stop blaming the victim and actually look at who the perpetrator is, who the fraudster is, who has manipulated them,” Downing said.

Downing recommended a single fraud reporting mechanism. He believes there should be several tools to report to a single reporting solution, which can then decide where to send a victim’s case. The victim’s case can either be routed to a victim support agency, the victim’s bank, a debt management organization or law enforcement.

All these steps will lead victims “towards a new fraud ecosystem,” which Downing said will help Action Fraud, the U.K.’s national reporting center for fraud and cybercrime, “transform into a world-class, victim-centric” agency. He hopes that creating this type of reporting center will identify people who could be more susceptible to fraud, reduce the chances of fraud risk and lend more support to fraud victims.

In closing, Downing said, “These are important times, but we are part of the solution. Let’s not be part of the problem. The time is ripe to be transformational, ambitious and courageous. We really need to take that opportunity, because if we don’t, we’re going to fall further and further behind these evil, cowardly fraudsters.”