The Attorney General, Lord Goldsmith, has published the final
report of his fraud review and has found that internet fraud can
sometimes slip through current policing procedures and cost users
and businesses dearly.
"It is often confusing for victims to know who to report the
fraud to, particularly if it crosses geographical or sectoral
boundaries," said the report. "Fraudsters benefit from this lack of
continuity of response. Internet fraud is a particularly good
example of how a fraud can become difficult to report."
Goldsmith has proposed the formation of a National Fraud
Strategic Authority and a lead police force to tackle fraud on a
national scale. He also proposes setting up a National Fraud
Reporting Centre.
"Fraud is not a victimless crime," said Goldsmith in his
introduction to the report. "Work by the Home Office suggests that
fraud may be second only to Class A drug trafficking as a source of
harm from crime; and there is evidence that fraud funds terrorism,
drugs and people trafficking."
Goldsmith found that several other countries, most notably the
US, have adopted more co-ordinated approaches to detecting and
preventing internet fraud.
The Internet Crime Complaints Centre (IC3W), a partnership
between the US Federal Bureau of Investigation and the National
White Collar Crime Centre, is one organisation the report held up
as an example of good practice.
"It is specifically designed to accept reports of people who
have been defrauded over the internet, a problem which is
particularly difficult to solve with geographical reporting
arrangements," said the report. "IC3W provides an analytical
function and informs FBI work, and is linked to the National
Cyber-Forensics & Training Alliance which tackles internet and
high-tech crime."
"The internet has provided new opportunities for fraud to be
committed and it is now a significant problem for both businesses
and individuals," said David Woods, an associate and litigation
expert with Pinsent Masons, the law firm behind OUT-LAW.COM. "The
current system has made it difficult to co-ordinate efforts among
the various law enforcement agencies to effectively tackle fraud,
and it is a welcome development to see a renewed focus on seeking
to deal with this problem."
Internet fraud is certainly affecting the UK. The 2002/2003
British Crime Survey analysed technology crime and found that three
quarters of respondents were worried about using a credit card
online. The Attorney General's report found that the costs of this
kind of fraud were not always the obvious costs.
"Externalities are costs or benefits from activities which
affect behaviour but are not fully reflected in prices," said the
report. "The reluctance of some people to use the internet for
financial transactions because of fear of fraud even though they
would save money on the transaction by doing so is an example of an
externality."
Goldsmith said that the best way to stop fraud was for consumers
and businesses to act sensibly. "The review is clear that much
fraud could be avoided if consumers, businesses, and public sector
bodies took elementary precautions and, in appropriate
circumstances, exercised sensible scepticism about offers that were
obviously too good to be true," said Goldsmith.
