Cost of major fraud tops £1bn after leap in cyber crime, KPMG Fraud Barometer shows
- Credit: PA
The cost of fraud to Britain rose above £1bn for the first time in five years in 2016, driven in part by a huge surge in cyber crime.
The total value of major fraud in Britain soared 55% to £1.14bn last year, despite the number of cases dropping by nearly a third from 310 to 220, according to KPMG's Fraud Barometer.
KPMG, which measured cases in UK courts with losses of £100,000 or more, said this was due to a rise in 'super cases' worth more than £50m, while the value of the average major fraud case doubled to £5.2m from £2.4m.
The barometer also highlighted a 1,266% jump in cyber fraud, which reached £124m in 2016.
This included a case where cold callers pretending to be members of bank fraud departments persuaded some 750 victims to reveal security details. Gang members were making between £1m and £2m a week during the scam's peak, taking a total £113m from victims between January 2013 and October 2015.
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They targeted Lloyds and Royal Bank of Scotland business banking customers and, while police said that no insiders from within the RBS banking group were discovered, three Lloyds collaborators were convicted. The campaign was described by police as one of the biggest cyber fraud scams ever investigated in the UK.
KPMG UK forensic partner Hitesh Patel said: 'Both public and private organisations openly acknowledge that cyber-attacks are one of the most prevalent and high-impact risks they face, and yet many operate on the basis 'it won't happen to me'.'
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Fraud against businesses was up seven-fold in 2016, with internal fraud committed by employees and management the most common type.
Business lobby group the Institute of Directors (IoD) said last month that a cyber attack was likely to topple a major company in 2017 as companies faced a growing threat to their security systems from hackers.
Meanwhile, a survey by PWC found that 76% of UK chief executives considered cyber risks a significant business threat.
Mr Patel said: 'Organisations must keep abreast of the cyber threats, both physical and digital, to ensure protection mechanisms don't become obsolete, given the pace of technology and business change.
'You can have variety of IT protections in place to defend yourself but it's all for nothing if you are tricked into giving away the keys to the electronic vault.'
The KPMG report added that the jump in fraud also reflected 'recent economic fortunes'. The slow recovery from the financial crisis has sparked investment and spending but that money is now 'falling into fraudsters' sights'.
Meanwhile, employees and consumers still feeling the pinch of austerity measures are adopting 'less legitimate means to maintain lifestyles'.
The report said: 'Increased pressures both to deliver on targets in a highly competitive and uncertain environment and to preserve personal finances have made people more willing to disregard their moral compass and see fraud as a shortcut to success.'