Fraud Rises 9% As UK Braces For Surge In COVID-19 Scams

By Richard Crump
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Law360, London (April 3, 2020, 6:13 PM BST) -- Britain's top law enforcement agency reported a rise in fraud driven by cybercrime on Friday amid warnings of a spike in scams by criminals exploiting the coronavirus pandemic to target pension savers, investors, online consumers and remote workers.

Incidents of fraud increased 9% to 3.8 million, representing a third of all estimated crime, in the year ending September 2019, according to figures published in the National Crime Agency's latest strategic assessment, which found reported losses had risen to £2.2 billion ($2.7 billion).

The NCA said cybercrime is a major enabler of fraud through data obtained via data breaches, phishing and malware, estimating that the internet plays a role in at least 54% of all fraud.

"Cybercrime is significantly underreported and so it is difficult to estimate the scale and cost of it to the U.K.," the NCA report said.

The report warned that Russian-language cybercrime groups pose the greatest threat to the U.K. and are responsible for the most serious attacks.

Most related activity in the U.K. involved money launderers or money mules — individuals who transfer criminal proceeds on behalf of others into, through and out of retail banks — the NCA said. More than 40,000 cases of suspected money mule account activity were reported in 2018, the latest available figures, up 26% from 2017.

Investment fraud resulted in the highest total losses from victim-reported fraud, with reported losses of £338 million in 2019.  

"One potential driver of this is the low interest environment, with victims — many of whom consider themselves financially savvy — enticed by the high returns offered by fraudsters," the NCA said, adding that cryptocurrency investment fraud is an emerging area of concern.

Business email compromise, where criminals imitate an employee or a common supplier of a company — usually requesting payment of an invoice — by using compromised credentials to seem credible, is also one of the fastest growing threats, the NCA said.

The figures were published amid warnings from U.K. authorities of a surge in scams exploiting fears over the COVID-19 outbreak.

The Pensions Regulator, the Financial Conduct Authority and the Money Pensions Service warned consumers to be aware of coronavirus scams, such as bogus text messages claiming to come from government departments, banks and other trusted companies.

Criminals are also targeting people who may be vulnerable or increasingly isolated at home with offers that look too good to be true, such as high return investments and health care opportunities.

Huge increases in the number of people working remotely also means more people will be vulnerable to computer service fraud. The NCA also expects that there will be a surge in phishing scams or calls claiming to be from government departments offering grants, tax rebates or compensation.

--Editing by Alyssa Miller.

For a reprint of this article, please contact reprints@law360.com.

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