Online shopping fraud has increased by 55%
Online shopping fraud has increased by 55 per cent Unsplash/Elisa Ventur

The total number of fraud reports in the UK rose by 6.5 per cent over the past year, according to new research by the money-lending platform Fluro. Online shopping and auction fraud rose steeply, with the South of England being the worst affected area overall.

Figures for the previous 13 months show British consumers lost more than £2 billion to fraud, £20 million more than the year before. The total number of reports made to major fraud reporting organisations Action Fraud, Cifas and UK Finance rose by 6.49 per cent with UK police contacted 310,000 times.

What is the worst type of fraud?

According to the data, the costliest form of fraud is related to financial investment schemes, with the public losing a total of almost £338 million. Other costly forms of fraud include pyramid and Ponzi schemes (£250.4 million); share sales and boiler room fraud (£146.7 million), where fake stockbrokers cold-call investors and force them into buying worthless shares; cheques, bank cards and bank accounts fraud (£132.4 million); and online shopping and auction scams (£98.1 million).

Online shopping and auction scams were the most commonly reported type of fraud. In the last year, there were 72,147 incidents, roughly as many as the next three types combined - advance fee fraud (31,250); consumer non-investment fraud (21,391); and cheque, plastic card, and bank account fraud (21,33).

Online shopping and auction scams increased by 55 per cent year-on-year, more than any other type, illustrating a major risk associated with e-commerce becoming more popular than physical stores in the British economy.

Elsewhere, the report showed The South of England is the worst affected area in the UK. Ranking the areas by the number of reports and money lost overall and average per person, it found Metropolitan, Surrey and Thames Valley to have the highest amounts of fraud. The majority of the ten most affected areas were also in the South of England.

How is fraud changing in the UK?

The news comes at a time when there are warnings that fraudsters are becoming more innovative as they adapt to the changes in the UK economy. "Scammers are becoming more and more sophisticated, coming up with different tactics, such as impersonation texts or calls, and using the cost of living pressure as a way to tempt investors into false opportunities," said Mark Steward, executive director of enforcement and market oversight at the Financial Conduct.

Cryptocurrency is an area of particular concern. There has been an evolution in the techniques to defraud people. Scammers have been able to snare large amounts of investors with fake celebrity endorsements or by associating their scheme with a current trend in the market. Recently, the interest in AI-related crypto tokens was exploited by flooding the market with fake crypto tokens branded after the popular chatbot ChatGPT.

What is being done to combat it?

AI is also an important tool for those fighting fraud. Companies use it to monitor large amounts of electronic transactions daily and detect unusual purchasing behaviour.

"It can provide a more streamlined process to deal with any fraudulent activities to protect us," said Vrinda Khurjekar, senior director at the technology consulting firm, Searce, when speaking on the usefulness of AI in fraud detection.

The goal is to perfect technology that can simulate financial interactions and analyse any problems that occur so that in the future AI will be able to detect fraud before it even happens.

The improvement in technology will pave way for new solutions that will sit alongside traditional means for tackling the issue.

Education remains the heart of prevention, with Action Fraud providing a list of advice for preventing fraud that includes using secure payment options and installing up-to-date virus software. Nicholas Harding, CEO of the report's author Fluro, said the number one way to prevent fraud is still to "never give your personal information to organisations or people without confirming their credentials."