OFT affected by £250,000 fraud
It seems that no one is immune from fraud these days. It was recently revealed that the Office of Fair Trading (OFT), the government body set up to protect the interests of the consumer, was duped for £1/4 million over a two year period by a member of staff. The revelation comes as somewhat of an embarrassment for the OFT since their own website contains information on how to spot and avoid fraud.
The information was buried in the small print of the OFT's latest annual financial report. It said that the losses, which amounted to £153,000 in 2007/8 and £97,000 in 2009/9, were attributed to control weakness in the 'accounts payable' procedures. Since the matters are the subject of further legal action, a spokesman for the OFT has declined to elaborate further.
It appears that there may be other control weaknesses in the body. The accounts show details confirming that over £604,000 was paid out due to mistakes or legal action taken against them. It also details an out of court settlement of £100,000 paid to the supermarket giant W M Morrison for libel. The OFT also wrote off £4,138 on pay and allowance miscalculations.
On a more positive note, the Chief Executive, John Fingleton, did not receive a bonus payment on top of his annual salary of £270,000. He received £2,900 in the previous year.
The OFT is not the only body to suffer from fraud. Since the recession began to take hold there has been a general upsurge in the incidence of fraud both in the retail and white collar commercial areas. Perhaps the biggest fraud was that perpetrated by Bernie Madoff who managed to swindle billions of dollars out of investors over nearly twenty years with a promise of better returns.
The latest reported increase in fraud is that against consumers and using credit cards. Higher incidences of skimming people's credit cards and stealing their PIN numbers is being experienced at a number of retail outlets in the UK. Amongst the highest risk areas are petrol stations where there is poorly paid staff with a high turnover rate. Criminals are bribing employees to install card skimming devices into readers in the petrol stations when they are closed. CCTV cameras then view the customer inputting their PIN and the resulting information is passed to criminals for them to steal money. Cash machines inside petrol stations and pubs are also being blamed for a higher incidence of card fraud due to their vulnerability to tampering by staff or cleaners.
It has been known for some time that losing sight of your credit or debit card inside a restaurant could lead to details being stolen. However, there was a promise of greater security once chip and pin was introduced. It seems that criminals move quicker than the card companies in terms of exploiting loopholes in their systems, though. According to the British Crime Survey, published by the Home Office, over 2.8 million fraudulent transactions were recorded in 2008 – a rise of 4 per cent on the previous year.
There has also been a marked increase in the 'cash for crash' fraud. This is where accidents are staged so as to defraud insurance money by claims for personal injury. Insurers are blaming the recession for a 70% increase in claims as people seek ways to raise easy cash. The most common scenario is where a driver slams on their brakes and forces a car following to run into them. Claims can reach £15,000 and the total cost is estimated to increase every policy premium by an additional £44 per year.
But it is in the white collar fraud area where the most lucrative rewards can be found by fraudsters. Over 818 frauds were reported by company directors in 2008 – a 313% increase over 2007.
So what does the OFT advise in the area of fraud prevention and detection? It's most recent publication covers mass market scams – an area that is estimated to lose consumers around £3.5bn per year. They estimate that around 48% of the total market is targeted by scams seeking to dupe people out of money. They include lottery tickets, vehicle matching, training and home working. Whilst only 8% of the population will be duped it is estimated that 1% will be repeatedly victimised. Their campaign for 2009/10 seeks to raise awareness in the 8% who are most at risk of being defrauded. They plan a total campaign costing £400,000 to achieve their goal of reducing the number of affected people. But, perhaps they should use some of the money to shore up their internal systems deficiencies first.