July 19, 2011

While West Africa is the highest risk country in the region, with countries like Ghana and Nigeria being overwhelmed with fraud, there is a new and disturbing trend emerging from the U.K. Although the U.K. is a highly developed nation with strict law and order, it is also a country struggling to deal with the exploding problem of internet fraud and scams. A recent study sponsored by the British government has uncovered surprising results about all the money lost from internet fraud and scams. And the numbers are shocking. UK private investigators have been aware of the risk for quite some time, and it’s only now that the government is acknowledging the problem. As the public becomes more aware, it is hoped the crime will dissipate.

The United Kingdom has lost an estimated 27 billion pounds in 2010 alone from internet scams, where private businesses recorded the largest losses. Industries like pharmaceuticals, biotech, electronics, IT and chemicals have lost significant amounts of money resulting from intellectual property theft, industrial espionage and extortion coming from transferring money overseas to fake companies in China. In most cases, this big loss could have been avoided if these companies would have conducted an international due diligence prior to getting involved with agents, contacts or other companies outside the U.K. Private investigators and law enforcement agencies urge consumers and businesses to verify new international relationships, especially when the relationships are formed via the internet. Not doing so, leaves one wide open to fraud.

One contact familiar with the study said the problem is “endemic” and is increasingly a major threat to the British economy. The information regarding the size of the annual financial losses in caught many by surprise. According to the first government-sponsored study of online fraud and scams, 2011 is likely to be even worse. Consumers and businesses beware.

Among the business fraud and internet scams targeting businesses, individuals are heavily targeted by internet criminals as well. Crimes range from romance scams, identity theft, relationship fraud, investment scams, inheritance scams and many more. Many criminal groups in Nigeria and Ghana now have accomplices and satellite criminal rings operating in London, a result of uncontrolled immigration policies in the U.K., and Britain’s failure to protect its border.

Even more shocking is that international private investigators say many crimes go unreported, as citizens and businesses are embarrassed, or otherwise don’t want people to know that they’ve been a victim. As a result, the financial losses could be much higher than reported.

Fraudsters are professionals and they know how to target their victims. The internet provides them with anonymity that lowers the risk of being caught and prosecuted. Security ministers in London are urging that measures be taken to stop the crime trend, although thus far law enforcement has no effective tools to prevent it. By October, the U.K. will open an office serving online victims called The Cyber Security and Information Assurance Office, though its efficiency and effectiveness will be a challenge, since many criminals operate from outside the U.K. Crimes can originate as far away as Ghana, Nigeria, Malaysia, Thailand, Russia, the Ukraine, the Philippines and China. How the office will address this foreign threat is unclear. One step that everyone agrees on is making consumers and businesses more aware of the threat. To lower the risk, a professional UK background check or international due diligence is advised.

All the best,

S. Birch
© 2011 S. Birch

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