The East Midlands has jumped from 12th to second position in the top hot spots for fraud, according to accountancy and business advisory firm, BDO LLP.
The firm’s annual FraudTrack 2024 report shows that the region is the second most prevalent region for UK reported fraud only behind London & the South East, reporting an increase of over 10,000% in fraud value. Compared to the previous 12 month period, the East Midlands also saw a 90% increase in the number of cases in 2023.
Among the notable cases in the region were a fraudulent investment scheme operated by a Spalding man, a Nottinghamshire-based home improvments scam, and a case brought against a UK car dealer regarding alleged ‘fraud or fraudulent misrepresentation’ in connection with a disputed software contract.
The BDO report showed that the overall value of reported UK fraud increased to £2.3bn in 2023, a 104% increase on 2022 and the second largest annual fraud value recorded by the firm since it first started analysing fraud data in 2003.
However, the true level of fraud is likely to be significantly higher, BDO has warned, as some organisations choose not to report the frauds they suffer. The latest Crime Survey for England and Wales revealed that fewer than one in seven fraud offences are reported to the police.
While the number of high value cases (over £50m) in BDO’s FraudTrack report increased by 60% in 2023, the total number of reported cases also rose, up by 18% to a three-year high.
The factors behind the rise include the large increase in online scams, phishing and system breaches, and huge spikes in Authorised Push Payment (APP) transactions when fraudsters trick the unwary into transferring money to them.
Sannan Khan, Partner and Head of Regional Investigation and Economic Crime Risk Management Services at BDO in the Midlands, said: “We are not surprised by the East Midlands jumping 10 places from 12th to second in the list of most prevalent regions for UK reported fraud. This is consistent with the surge in frauds that our forensic investigations teams are seeing on the ground.
“Many people choose not to report fraud because of shame or embarrassment. Businesses are also reticent about coming forward because of fears around negative publicity, reputational damage, and a lack of faith that the authorities will take action.”
One particularly concerning development is the rise in online fraud factories or cyberfraud centres, with reports of hundreds of thousands of individuals being trafficked to work for crime syndicates. The UN has recently estimated that such fraud factories are generating billions of dollars in revenue.
Looking back at the 10 year trend of data, the report identifies that not only are the number of reported cases of fraud rising but the amounts involved are also getting bigger. BDO has warned that this trend is likely to continue as new fraud-enabling technology and AI present new opportunities for fraudsters.
Khan added: “While we hope the introduction of the Government’s Online Fraud Charter will encourage the technology sector to narrow the opportunities for online fraud, the sad reality is that the fraudsters will be looking to stay one step ahead by exploiting new options like AI.
“The failure to prevent fraud offence and reforms to the identification doctrine introduced by the Economic Crime and Corporate Transparency Act 2023 should provide in-scope organisations significant incentives to revisit their fraud and wider economic crime risk management frameworks.”
