Fraudsters hit charities for billions of pounds

Cyber attacks web

The cost of fraud to charity and charitable trusts has been revealed in the Annual Fraud Indicator report

9th January 2018 by Gareth Jones 0 Comments

Charities lost billions of pounds in a year at the hands of heartless fraudsters.

An annual report on the cost of fraud in the UK has revealed that charities and charitable trusts were hit for around £2.3 billion in the 12 months to November 2017.

The cost of fraud has been described as colossal to the economy, and charities have been advised to ensure they take protection to prevent cyber scams.

The Annual Fraud Indicator 2017 reveals that estimated fraud in registered charities rose from £1.9bn in 2016 to £2.3bn. A significant proportion of the rise has been attributed to charities increasing their expenditure on procurement of services, which in turn led to estimated fraud of £400 million.

Payroll fraud rose by £4m but grant fraud fell by £35m compared to the previous year.

Broken down, it is estimated that the voluntary sector lost £990m to payroll fraud, £1,163bn to procurement fraud and a further £161m to grant fraud.

The report highlights that technology has been exploited to perpetrate frauds across all sectors, with online banking fraud having grown by 226% and telephone banking fraud by 178% over the period.

Several third sector organisations fell victim to high-level cyber fraud last year, including the Highland Hospice and bulldog charity The Edward Foundation, which lost out on around £500,000 and £21,000 respectively in vishing scams.

David McNeill, director of digital at the Scottish Council for Voluntary Organisations (SCVO), said that organisations need to be prepared to respond to new forms of fraud.

“Most organisations will have good procedures to minimise the risks of traditional forms of fraud and theft,” he said. “However, cyber crime is the fastest growing threat to organisations across sectors.

“The past year has seen several charities lose significant sums of money to online and telephone scams, as well others who have had their activity disrupted by ransomware viruses. Staff and trustees must be aware of these new risks and take steps to protect themselves from increasingly sophisticated forms of fraud.”

The total cost of fraud in the UK amounted to a staggering £190bn - described as a colossal amount by Jim Gee, head of counter fraud services at report authors Crowe Clark Whitehill.

“These numbers are far from insignificant,” he said. “With the latest National Audit Office and National Crime Agency statistics confirming that fraud has surged to the top of the list of commonly committed crimes, now is the time to identify and measure its cost so that businesses, government bodies, charities and individuals can understand the value of their investment in countering fraud.”