18th October 2017
Scope of the Inquiry
Around one in six of all estimated crimes in England and Wales in the year to 30 September 2016 were fraud committed online, according to the Office for National Statistics (ONS). Online fraud includes criminals accessing individuals’ and businesses’ bank accounts, stealing and using their card details, or duping them into transferring money.
City of London Police is the national lead force for online fraud and works to improve capability across forces; however, individual Police and Crime Commissioners are responsible locally. According to the National Audit Office (NAO), approaches by police forces vary with some working well with the private sector to help identify victims, but others treating online fraud as a low priority.
Home Office Ministers have formed a Joint Fraud Taskforce to help coordinate a response to the growing problem. However the NAO report found that the Home Office faces a challenge in convincing partners such as banks and law enforcement bodies to take on responsibility for preventing and reducing the crime. The NAO also found that the Home Office lacks accurate data with which it can assess the adequacy of its response. It is estimated that only one-fifth of Online Fraud is reported to the police, but even then available data is not sufficiently shared between the Government, law enforcement agencies and industry.
The Public Accounts Committee will ask witnesses from the Home Office and City of London Police about how they are working with partners to promote responsibility for the problem, and how they are better educating the public about protecting themselves against fraud. The Committee will also ask whether police forces are focusing enough resources on tackling this threat, with the NAO reporting that nationwide only one in 150 police officers worked primarily on economic crime.
Questions from Gillian Keegan MP
Q44 Gillian Keegan: Having spent much of the 1990s in the far east sorting the chips for chip and PIN, I worked for both a bank and payment system. This is always an issue, to try to keep one step ahead of the fraudsters, and technology is a massive part of combating that. If I look at some of the ways that you use technology today, it is kind of low-tech, a lot of the stuff that you are doing, such as CVC numbers and that kind of stuff. What are you doing now to get ahead? This can only grow; you have got all of the ingredients for this to be massive. What are you doing in terms of technology and investment in technology to protect your customers?
Brian Dilley: Any awful lot of what we are doing is not visible to the consumer because it is the things we are doing using artificial intelligence, machine learning and so on, to try to look for patterns in the data and try to identify the suspicious transactions. Banks are spending tens of millions of pounds a year on these systems to try to do exactly that.
Q45 Gillian Keegan: They are not very successful then, are they?
Brian Dilley: We are succeeding, actually, because the total level of fraud has gone down 8% while transactions have been increasing. I would say we are succeeding. Is there more that we can do? Yes.
Chair: But it’s the largest growing area of crime, isn’t it? Like it or not, you and your competitors—the people that Mr Jones represents—are at the forefront of the largest growing area. You are effectively on the ground the buffer between the customer—
Q46 Gillian Keegan: And have enabled it in a way.
Brian Dilley: If there are transactions there are going to be fraudsters. If there is money there will be fraudsters. Absolutely, we are at the forefront of that.
Q50 Gillian Keegan: It seems clear that, when the police start to roll out, the actual numbers are going to quadruple. That will mean that, once we have the numbers of how many people are actually suffering from this crime, your comments before about controlling it will be completely irrelevant. With that in mind, to give confidence and faith to consumers, you will have to be much more transparent with the actions and activities that you take, because this will balloon almost overnight.
Brian Dilley: To be clear, the numbers I was talking about were the ones that are within our control on transaction fraud. We know what those numbers are.
Gillian Keegan: As the payment technology providers, a lot of this is within your control.
Chair: I think Ms Keegan has quite useful experience and has a particular question on this point.
Gillian Keegan: You use the analogy of chip and PIN, which I was heavily involved in. The difference between then and now is that the fraud that was being experienced at that point and the forecast of growth in fraud was being borne by the banks. It was the banks that were losing out. In this case, one of my concerns, and perhaps why this action and activity are a bit more passive, is that it is about consumers. The risk has spread and it is not sitting with the organisations. They are not even getting reported. Whether it is the banks, the bank accounts, the technology that is servicing that or the payments technology, they are not the ones wearing the risk and the cost in many cases, and that will change the activity levels, and I think that is what we are seeing.