Partner Article

Fraud costs region £6.1m in 6 Months

Fraud cost the North East economy £6.1 million in the first half of the year, forcing businesses to spend more time fighting fraud than ever before.

This figure contributes to a national total of £1.1 billion, a massive increase on the same period in 2010.

While government agencies were hardest hit, nearly half of fraudulent activity was directed at private sector companies. This can be especially damaging to SMEs, as for them fraud can result in significant cash flow problems.

The increase in fraudulent activity has been attributed to increasing reliance on automated payment systems and the ability of professional criminals to break through security.

Sara Smith, of KPMG’s Newcastle forensic practice said: “Fraud levelled at UK businesses tears at the very fabric of the economy.

“The impact of fraud can be long lasting, affecting the organisation’s growth and competitiveness. It may dampen customer and staff confidence, cause damage to reputations and detract from simply running the business.”

Six large fraud cases reached the crown courts in the region, and included an employee who stole £1.3 million from the motor company she worked for, as well as several mortgage and insurance frauds.

It is now hoped that the newly formed Bribery Act and National Crime Agency, will provide businesses with the support they need to prevent fraud.

Sara also recommended that businesses complete an analysis of where they are vulnerable and arm themselves with a set of controls to enable them to detect any fraudulent activity.

“This high increase in the level of fraud hitting the private sector demonstrates the importance of ensuring that companies have mechanisms to prevent fraud and detect misconduct effectively”, she added.

This was posted in Bdaily's Members' News section by Ruth Mitchell .