Permissive culture towards fraud must be stopped, says House of Lords committee
A new corporate criminal offence should be introduced to help incentivise all industries to play their part in combating scams, the committee said.

A āpermissive cultureā exists around fraud, and more joined-up action is needed to prevent scams from happening in the first place, according to a House of Lords committee.
A new corporate criminal offence of āfailure to prevent fraudā should be introduced, to help incentivise all industries to play their part in combating scams, the Fraud Act 2006 and Digital Fraud Committee urged.
The telecoms sector must do more to tackle scam messages before they reach victims and combat spoof calls, while the tech sector must slam the brakes on fraudsters using online advertising and social media platforms to reel in consumers, the committee said.
Plans to hold platforms to account via the Online Safety Bill for online fraudulent advertising appearing on their services must not be allowed to slide and should be strengthened, it added.
The private sector must be encouraged to combat fraud not only through facing the threat of corporate criminal liability or regulatory action, but also through the creation of a safe harbour for the sharing of data
Meanwhile, the financial services sector has been ābounced into actionā due to the burden of reimbursing customers who have lost out due to fraud, the committee said.
āUntil all fraud-enabling industries fear significant financial, legal and reputational risk for their failure to prevent fraud, they will not act,ā the report said.
It continued: āThe private sector must be encouraged to combat fraud not only through facing the threat of corporate criminal liability or regulatory action, but also through the creation of a safe harbour for the sharing of data for the purposes of preventing fraud.
āIt is only through a holistic approach involving every part of the fraud chain that fraud will be prevented upstream before money leaves a victimās account.ā
Payments should be delayed in certain circumstances to allow more time for banks to review risks and contact customers, the committee suggested.
When fraudulent payments do slip through the net, it should not be the sole responsibility of the financial services sector, in particular the victimās bank, to pick up the bill, it said.
All stakeholders in the fraud chain, including the payeeās bank, must know they have a duty both to prevent fraud and to address their failings and the victimsā losses once it has occurred
āAll stakeholders in the fraud chain, including the payeeās bank, must know they have a duty both to prevent fraud and to address their failings and the victimsā losses once it has occurred,ā the report said.
The committee also called for a āunited, centrally-led public awareness campaign that takes its lead from best practice exhibited in public health campaignsā, to help tackle fraud.
The report said: āWithout fear of facing investigation or justice, organised criminals around the world turn to the UK as a lucrative market to commit fraud.
āThey know that they can operate with limited fear of prosecution or redress for their crimes, the proceeds of which they use to fund further criminal activity including human trafficking and the drugs trade, and they do not have any regard for their victims.ā
Law enforcement agencies are āchronically underfundedā for fighting fraud and Action Fraud, the UKās reporting centre for fraud and cyber crime, remains inactive and misunderstood, the committee said.
The report said: āThe effect of such under-prioritisation has been to create a permissive culture across Government and law enforcement agencies towards fraud and the criminals who perpetrate it.
āThis then permeates through to affect the attitudes of private sector players in the fraud chain, which describes the steps involved in a fraud, who have not stepped in to do what they can to prevent consumers being scammed.ā
The āalphabet soupā of bodies responsible for fighting fraud is ineffective, the committee said, and creates a vacuum of responsibility and a culture of blame-shifting.
It said a Cabinet sub-committee should be set up with a clear mandate to tackle fraud.
Fraud is the most commonly experienced crime in England and Wales, accounting for approximately 41% of all crime against individuals, the report said.
āIf citizens were being routinely mugged and having millions of pounds stolen from their wallets in broad daylight, every organisation involved in allowing this to happen would have no choice but to deal with it swiftly, and the perpetrators would be brought to justice in court,ā it said.
āBecause most fraud is now happening online and often involves social engineering of the victim, the exponential growth in fraud and scams has been invisible and fraudsters face little risk of being caught. This has to stop.ā
Having been socially engineered by fraudsters, many victims will face a crisis of confidence and lose trust in authorities and people, the report added.
It would not be allowed to happen, and carry on, if people were being mugged in broad daylight for thousands of pounds
Speaking to the PA news agency, committee chairwoman Baroness Morgan said fraud is often seen as āa hidden online victimless crime where people can just be paid out and itās all put rightā.
She continued: āActually itās really missing the point about the devastation ā emotional devastation ā that this crime can cause.
āAnd it would not be allowed to happen, and carry on, if people were being mugged in broad daylight for thousands of pounds.ā
Baroness Morgan also said there is a āmisperception that different institutions canāt talk to each other, share data, when they know that people potentially are being defraudedā.
Referring to the impacts that fraud has on society, she told PA: āIf you talk to any victims, as we have done, who have been defrauded, itās not just about the money, itās about a breach of trust.
āAnd itās emotionally devastating and people (find it) very difficult then to trust again in any institution that asks for your details or (when) buying things online.
The lack of a joined-up approach between different business sectors is holding back the fight against fraud and leaving consumers exposed to unscrupulous scammers
āPeople are terrified that itās going to happen to them again. So I think this really is a huge issue affecting consumer confidence all the way through.
āAnd as people have been buying more online, they need to be able to buy with confidence, to be able to transfer money ā and to know that actually every part of the fraud chain is being cracked down on.ā
Rocio Concha, Which? director of policy and advocacy, said: āThe lack of a joined-up approach between different business sectors is holding back the fight against fraud and leaving consumers exposed to unscrupulous scammers.ā
A Government spokesperson said: āWe remain absolutely committed to preventing callous predators from stealing cash from hard-working families.
āWe will shortly publish our Fraud Strategy which details how we will stop fraud attempts at source, empower potential victims to recognise and avoid fraud and prosecute more perpetrators.ā
Alex Davies-Jones, Labourās shadow minister for digital and tech, said: āLabour has been pushing Government for years to strengthen protections against fraud and scams.ā