The 12 emerging fraud threats to watch out for

Fraud has long been the crime you're most likely to fall victim to, but it has now become near ubiquitous.

A recent Office for National Statistics (ONS) report shows that an estimated 5.1 million fraud offences were committed in England and Wales in the year to September 2021 - up 36% in two years. Fraud now accounts for 40% of all crimes recorded.

The UK was already among the worst countries in Europe in terms of exposure to scams and fraud before the pandemic compounded the problem.

Scammers quickly exploited our fear and confusion, whether by impersonating the government to offer fake Covid-19 grants, setting up fake NHS websites to steal card details, or posing as delivery companies to target online shoppers stuck at home during national lockdowns.

These tactics aren't going away any time soon, but they're by no means the only way scammers are targeting victims. Here we reveal the 12 emerging threats we all need to watch out for.

Shopping and investment scams dominate

Which? Money has analysed 14 months of data collated by Action Fraud, the fraud and cybercrime reporting centre.

From November 2020 to December 2021, individual victims lodged a total of 448,838 fraud reports. Between them, they lost £1.9bn. These figures are shocking enough, but they represent just a fraction of the ONS' estimated number of offences as so much fraud goes unreported.

Online shopping and auction fraud continues to dwarf other types of fraud, accounting for 23% of all reports, but investment fraud victims lose the most money.

On average, victims of pyramid or Ponzi schemes lost £50,400, compared to £650 for victims of online shopping scams.

The table below lists 12 emerging fraud threats to watch out for.

Notes: Which? has focused on 12 emerging fraud threats affecting individuals (not organisations). Reports and average loss based on analysis of Action Fraud reports between November 2020 and December 2021. Figures in brackets show year-on-year change in number of incidents, based on Action Fraud figures reported in the latest ONS Crime survey for England and Wales, comparing the periods Oct 2019-Sept 2020 and Oct 2020-Sept 2021. Which? has altered the names of two fraud types (Action Fraud records 'shopping fraud excl online' as 'other consumer non investment fraud' and 'computer fixing fraud' as 'computer software service fraud').

Fraud threats explained

• Online shopping and auction fraud You pay for goods on an online marketplace that don't arrive, or don't receive payments for goods you've sold.Follow our tips to spot a shopping scam.
• Other advance fee fraud You pay an upfront fee related to fraud not classified elsewhere eg career opportunities, clairvoyants or bogus officials.
• Shopping fraud Any other type of shopping fraud eg when buying goods from a newspaper ad in person or a shop on the high street. Excludes online shopping.
• Computer fixing fraud You pay a fee to a fraudster claiming they will fix a bogus technical issue on your computer.
• Other investment fraudFinancial fraud not classified elsewhere eg involving foreign exchange, cryptocurrency or investment seminars.
• Dating scams Fraudsters create fake profiles on dating sites/apps or target you on social media to establish a connection then ask for money. A type of advance fee fraud.
• Boiler room scams You're cold-called by fake stockbrokers and persuaded to buy shares or bonds in non-existent or near-bankrupt firms. A type of investment fraud.
• Rental fraud You're tricked into paying upfront fees to secure properties by fake landlords and letting agents. A type of advance fee fraud.
• Phone fraud Fraudsters pose as your mobile network to offer non-existent or worthless insurance. Also scams involving missed calls/texts that charge premium rates when you reply.
• Pyramid/Ponzi schemes Schemes where you have to recruit friends or family (pyramid) or pay returns to early investors to gain credibility (Ponzi). A type of investment fraud.
• Fraud recovery scams You're asked to pay a fee to someone who pretends they can recover money you lost to a previous fraud. A type of advance fee fraud.
• '419' advance fee fraud Fraudsters pose as foreign officials asking for money to release millions from a fictional inheritance or government fund. Named after a section of the Nigerian criminal code.

Young people more likely to report being scammed

It's often assumed that older people are more vulnerable to fraud, yet those aged 20 to 39 accounted for 39% of all reports to Action Fraud.

This age group was more likely to report rental fraud, pyramid or Ponzi schemes and online shopping scams than other age groups. Those aged 60 to 79 submitted 20% of all reports (of the 12 fraud types we've focused on, the most commonly reported were computer fixing fraud, recovery fraud, and '419' advance fee fraud).

The truth is that anyone is fair game. Criminals have realised they don't need to focus on breaching bank security systems when they can take aim at a more vulnerable target - banks' customers.

In 2021, cases of bank transfer fraud overtook card fraud for the first time. These scams often involve fraudsters posing as the police, banks, or any other legitimate firm to trick people into transferring money to an account they control.

Better protection against scams

While the UK is facing a fraud crisis, there is hope for victims.

Five years on from Which?'s super-complaint on bank transfer scams, the Treasury has committed to legislate to make it mandatory for firms to reimburse victims. We're urging the government to give the Payment Systems Regulator powers to make this a reality to protect consumers as soon as possible.

The government has also listened to our calls to to include fraudulent paid-for advertising in the scope of the Online Safety Bill, as Which? chief executive Anabel Hoult explains here.This should make it harder for online fraudsters to target victims on search engines and social media platforms.

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Only 8% of fraud is reported

Improvements to national fraud intelligence are also essential. Fraud has become the easy choice for criminals because offences are heavily underreported and convictions are troublingly low.

While there were an estimated 5.1 million fraud offences in England and Wales in the year to September 2021, only around 8% of these were reported to Action Fraud. One explanation is that people don't trust the authorities will take meaningful action.

This isn't unfounded cynicism - in 2018, we revealed that more than 96% of cases reported to Action Fraud go unsolved and only around 1% of police resources are spent on fighting fraud.

The good news is that the handling of fraud by government and law enforcement is under more scrutiny than ever before. The Treasury Committee has acknowledged 'crime agencies are not prioritising fraud and that they need more money to do so', while City of London Police has promised to replace Action Fraud with a new state-of-the-art cybercrime reporting and analysis service.

While we wait for law enforcement to play catch-up, you can take steps to protect yourself - and that starts with treating all unsolicited contact with caution.

Above all, the message is to take your time - or 'Take 5', as the banking industry puts it - to stop and think before you hand over money or information, to challenge any requests, and to protect your account by contacting your bank and the police if you think you've fallen for a scam.

The full version of this article appeared in the April 2022 edition of Which? Money magazine.

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