Insolvency professionals call for legislative change to fight war on fraud

The insolvency profession has urged the government to take advantage of practitioners' anti-fraud powers to help consumers after new research highlighted the financial impact of online scams.

A recent survey of 2,011 adults, from insolvency trade body R3 and ComRes, found that one in nine have been targeted by fraudsters in the last year, with victims losing an average of £1,016.

Younger people were more likely to admit to being a victim of fraud than older people, in what has been suggested to be a sign of the prevalence of online scams.

Those aged between 25 and 34-years-old were the most likely to report scams, with 16 per cent experiencing fraud in the last year. Victims in this age group said they lost an average of £1,408.

Commenting on the research, R3 president Phillip Sykes, said: 'It may be surprising that younger generations are the most likely victims of fraud, but online fraud does place younger age groups more at risk.

'It's important that consumers don't take things at face value, especially online. Ecommerce may be convenient, but convenience is not a substitute for due diligence. If things look too good to be true, they very often are.'

Sykes explained that formal insolvency proceedings empower insolvency practitioners to go after fraudsters and help return money to victims, and that, in some circumstances, the profession has wider powers than government agencies.

'The re-introduction of criminal bankruptcy, or making fraudsters bankrupt in the public interest, for example, would extend the circumstances in which an insolvency practitioner can pursue all of a fraudster's assets on behalf of creditors. Fraudsters would find it much harder to avoid repaying victims by hiding behind companies or squirrelling assets away overseas or with friends and relatives,' he continued.

Debt worries

The research also found that 12 per cent of over-65 year olds have been a victim of fraud in the last year, with the average cost of fraud in this age group being £1,322, the second highest of all age groups.

Meanwhile, 22 per cent of British adults who are 'extremely' worried about their current level of debt have been victims of fraud in the last year, compared to 7 per cent of those respondents not worried about debt. This suggests that those most worried about debt were the most likely to be victims of fraud.

'It's saddening that the most financially precarious are also the most vulnerable to fraud,' added Sykes. 'It may be that there's a role for improved adult financial education. A lack of knowledge about finances can not only contribute to financial difficulties but it also makes it easier for fraudsters to perpetrate their scams.'

Londoners were found to be the most likely to fall victim to fraud, with one in six admitting to have been defrauded in the last year.

 

John van der Luit-Drummond is deputy editor for Solicitors Journal
john.vanderluit@solicitorsjournal.co.uk | @JvdLD