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Fraud Updates
PCB News
Fraud Updates 2005
30 March
It has recently been reported that the value of criminal fraud cases has more than doubled to £756m in 2004. The figures for 2004, produced by BDO Stoy Hayward, did not include two major frauds, one relating to an alleged plot to steal £3.3bn using forged gold certificates and an alleged £1bn conspiracy to fix horse races. These cases were said to have been excluded so as not to distort the statistics.
The report noted that men were responsible for 86% of reported frauds. The motive for 60% of fraud was to fund a lavish lifestyle while a further 10% of fraudsters used the stolen monies to pay off financial and gambling debts. The report also noted that the average sentence for committing a fraud of over £1m was only 3.3 years. In the US, large-scale fraud can lead to a sentence of up to 20 years.
The report demonstrates that fraud is continuing to increase dramatically and that the current criminal penalties are insufficient to deter many fraudsters. Companies must, therefore, take a proactive approach to both preventing fraud and recovering any stolen money. If fraud is discovered, victims should always consider using civil proceedings as a speedy method of finding and freezing stolen assets.
14 March
It has recently been reported that thieves have attempted to steal £220m from the Japanese bank, Sumitomo. If the theft was successful, it would have easily been the largest theft from a bank in British history, dwarfing the £26m Northern Bank raid last year. The National High Technology Crime Unit (NHTCU) have been investigating the attempted theft since October 2004 and one man has been arrested in Israel. Further arrests are expected soon.
It is believed that the thieves used a Sumitomo employee to install "keystroke loggers" on the bank's computers. The keystroke logger was then used to record all information typed into Sumitomo's computers. Once information such as passwords and security codes had been collected, the thieves would have been able to steal money out of Sumitomo's accounts. It is not believed that the Bank suffered any losses.
This latest cyber-theft is yet another illustration of the importance of confidential information in committing cybercrime. If e-criminals obtain confidential information, they may be able to copy trade secrets, steal money from bank accounts or commit identity fraud. The English courts have a variety of powers to trace the thieves of confidential information. The Court may grant orders against third parties such as banks and ISPs to force them to provide information about the thieves. Alternatively, the Court may grant "John Doe" injunctions to prevent the use or publication of the confidential information.
8 March
It has recently been reported that fraud relating to credit and debit cards has risen to a record £500m in 2004. Figures released by APACS demonstrate that losses due to credit and debit card fraud rose 20% despite the introduction of Chip-and-Pin cards. Indeed it would appear that the introduction of chip-and-pin cards has caused part of the increase. Thieves have been targeting the large number of new chip-and-pin cards being distributed to customers through the post, causing "mail non-receipt fraud" to rise by 62% to £73m.
The largest category of credit card fraud was Card-not-present (CNP) fraud, where goods and services are purchased via telephone and the internet using stolen credit card details. This type of fraud soared by 24% in 2004 and generated losses of £150m. However, chip-and-pin technology is ineffective against CNP fraud because a Pin number is not needed to purchase goods and services online or over the telephone.
This is another example that supports the view that legislation and extensive security provisions are not slowing the rise of fraud. There is now growing recognition that both the public and private sector must take a proactive approach to reducing losses. Credit card companies and other victims of credit card fraud should always consider using civil proceedings as a method of recovering stolen assets. It is possible to use court orders to trace stolen assets, freeze bank accounts and even search the fraudsters' home.
| April 2005 | December 2004 |