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Fraud costing UK economy £193 billion every year

Staff writer |
The annual cost of fraud in the UK could be as high as £193bn per year, dwarfing previous estimates produced by the UK Government which put the figure at around £50bn in 2013.

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The report has revised and renewed research undertaken by the Government up to 2013 and reveals a level of fraud that equates to an average of more than £3,900 per adult in the UK with losses taking place at a rate of £6,000 per second.

The Annual Fraud Indicator 2016 has been overseen by the UK Fraud Costs Measurement Committee (UKFCMC), supported by Experian and PKF Littlejohn and is based on research by University of Portsmouth’s Centre for Counter Fraud Studies.

The private sector has been under the biggest attack from fraudsters, with both SMEs and large enterprises losing an estimated total of £144bn a year.

By far the biggest source of fraud for these businesses relates to procurement at £127bn. This includes crimes such as the submission of false invoices or the awarding of contracts in exchange for bribes.

The report highlights that procurement is so vulnerable because of the sheer size of expenditure which it accounts for, as well as the high volume, low value nature of transactions and the breadth of fraudulent activity it is susceptible to.

In addition to procurement fraud, the biggest types of fraud impacting UK businesses identified by the Annual Fraud Indicator include payroll fraud (which accounts for losses of £12bn per year – 8% of the total cost of fraud to the private sector) and insurance sector fraud, which costs £1.3bn a year through illegitimate claims with an estimated 350 frauds every day.

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