Preventative spend: research 2018

5. Stakeholder Inputs

5.1 Introduction

This Chapter presents the wider views and insights gathered through an extensive series of interviews with a wide range of organisations with a locus in the area of scams and frauds. In total we spoke with over 30 organisations and 40 individuals across a range of organisations.

Appendix 3 provides details of those organisations interviewed.

The interviews were conducted using an agreed topic guide which covered the following broad topics:

• introduction and organisation description;
• initial thoughts/ background research;
• types and incidence of scams;
• financial and other impacts;
• current preventative measures;
• governance and partnerships;
• future interventions; and
• further thoughts or insights.

The remainder of this Chapter sets out the outputs from these interviews.

One key point to highlight is the legal framework within which fraud/ scams exist with some aspect being devolved to Scotland while others (financial regulation) remain reserved matters.

5.2 Stakeholders Overview

Details of the organisations interviewed covered a wide range of focus including:

• legislative/policy making;
• regulatory agencies;
• enforcement agencies
• consumer groups;
• trading standards;
• financial networks; and
• individuals interest groups

It is clear that there is a wide range of organisations with an interest in frauds/ scams although these tend to be focused mainly on addressing their own particular audience. Other than government there is no single organisation which has a catch-all brief of operations covering all of the UK.

In a UK context, the Home Office has established the Joint Fraud Taskforce^[12] to co-ordinate activity. The main partners are:

• Action Fraud
• Take Five - To Stop Fraud
• National Trading Standards
• Financial Fraud Action UK
• Cifas
• National Crime Agency
• Victim Support
• Cyber Aware
• National Cyber Security Centre
• National Fraud Initiative

Note: Action Fraud is the UK's national fraud and cyber-crime reporting centre but currently is limited in representing Scotland.

5.3 Overview and Context

There is a strong consensus that fraud/ scams are a growing and significant problem in Scotland.

• Criminals [scammers] are now more organised^[13]
  • The activities of criminal groups rely on significant levels of planning and co-ordination. Business structures are to be found within fraud networks including chains of command, defined roles and remits, suppliers and service providers.
  • Fraudsters are networking online to share information and build criminal enterprises across the UK and overseas. Criminal tactics are constantly changing, as the criminals respond to our interventions and take advantage of new opportunities.

Criminals are more technically capable

• Criminals exploit the latest technology in a number of ways. They compromise computers to steal personal and financial data, both from individuals and in bulk. They use social networking to build trust with potential victims who are then duped or coerced into providing information needed for fraud or to pay money to fraudsters. Devices are used to disguise voices for telephony-based frauds.
• Criminals increasingly operate across borders
• Frauds affecting the UK are often linked to networks of criminals operating across the UK and overseas. Fraudsters are also investing significant time and resources to hide their criminal profits. The Financial Action Task Force estimates that fraud is now the second biggest source of global money laundering. The increased efficiency of international financial transactions and variety of financial products means that funds can be moved across continents swiftly through different channels.

5.4 Scale and Scope

It is seen as increasingly difficult to "pin down" the costs of fraud/ scams and there is no central or single definition or repository of information. For example, some estimates are made by the finance industry but only in relation to bank and card frauds/ scams, while others only consider pension or doorstep crime data.

Notwithstanding this the strong consensus is that whatever the actual costs - it is a BIG number.

There are also issues around unreported fraud or scams - some of which while scams may not constitute an actual crime. There are also issues of double counting with different datasets using the same data to produce their own figures.

In addition to direct financial costs (to individuals) it is recognised that there are real knock on impacts in terms of:

• health and social care costs;
• regulatory and consumer standards costs;
• crime reduction costs;
• marketing and awareness raising costs.

There is no real sense of what the actual costs are although some attempts highlighted earlier have attempted to put a figure on these indirect costs.

An issue which was raised time and again was the impact of fraud/ scams on vulnerable or older people - see below.

5.5 Vulnerable and Older people

According to Age UK^[14], more than 5 million people a year in the UK are victims of scams but only 5% of scams are reported. Also

• 80% of phone scam victims are over 55 years of age^[15]
• the average age of a postal scam victim is 74 years^[16].

While anyone can fall victim to a scam, older people can be at greater risk because scammers tend to target people who:

• live alone;
• are at home during the day;
• have savings or valuables; and
• are more likely to talk to them.

In addition, some older people might be suffering from dementia, which could affect their decision-making process or they might also feel lonely, which might make them more likely to talk to people.

5.6 What is being done to address the problem

There is currently a wide range of initiatives (highlighted earlier) but they are generally focused on particular groups or with particular messages or for certain types of scam/fraud.

While we were able to identify many of these we are sure there will be other examples which were not drawn to out attention. Some points for consideration:

• many use different language to deliver the same message;
• there are many different delivery channels such as on-line, mass marketing, TV/Radio, leaflets and flyers, individual contacts, events, etc;
• there are different approaches using mass marketing or a targeted approach with the belief being that both are necessary;
• there is a strong move to enlist a wider society approach for example through engaging with bank tellers, postal delivery workers, retail staff and using Council communications^[17];
• there are a few examples of some of the organisations coming together in a "partnership" but these are generally limited in membership or very specific in focus.

It is clear that there is already much going on to address the problem although we have no sense as to how effective this approach actually is in practice.

Finally we would highlight the "political" nature of the problem. Some of the aspects in relation to regulation are not devolved to Scotland but remain with the UK. This will limit the potential for the Scottish Government to address some of the issues highlighted below which would require to be addressed at a UK level.

5.7 Addressing the Problem

Introduction

This Section considers how to continue to address the problem and is based around the views, opinions and insights presented by the organisations/ individuals interviewed for the research.

Combating Isolation

Scamming can happen as a result of social isolation which can happen to anyone at any age. This leads to some individuals having no-one to turn to, to discuss concerns or receive advice before they are scammed. In fact, even after an individual becomes aware that they may be a victim of a scam, they may continue the harmful relationship with the scammer or repeat their actions, as they have such a strong psychological need to prove themselves right.

Being scammed can have such a strong psychological impact on a victim that they may lose their confidence and may even become afraid of answering their door or no longer make their own financial arrangements. They surrender their independence and autonomy because of their experience. In addition, there could be impacts on their physical health and could affect their behaviour and may start drinking or drink more excessively, stop seeing people, lose or gain a lot of weight or self-medicate.

There are other not so obvious indicators that someone could have become the victim of a scam, and this could include a drastic decrease in the amount of energy used by the victim as they can no longer afford to heat their home, or they perhaps stop answering the phone to legitimate callers as they are afraid it may be a scam, which further leads to social isolation.

Not only are there several and multiple impacts on the individual who is the victim of a scam, but there is also a societal cost. One statistic provided by a consultee is that an elderly individual who is defrauded in their own home is 2.5 times more likely to go into care or to die within a year^[18]. This adds to pressure on public services, the NHS, the social care system, pension credit, and welfare benefits where people have lost their money.

Suggestions made to combat this include:

• the roll-out of a similar scheme to that adopted by Age UK which included a befriending element;
• the re-introduction of Community Policing as in the past, these officers would have known who the vulnerable people within their communities were, would have been a local point of contact and someone that could individuals could approach in confidence (this is of particular importance where perhaps familial abuse of trust is concerned);
• encouraging communities to be a bit more inclusive in including vulnerable people;
• using respite care facilities more to educate older people and those with disabilities with regards to scams;
• involvement of utility companies to early identify those customers who may be at risk.

Encouraging Reporting

Stakeholders have identified that scammers are successful, in some part, due to the embarrassment or stigma of those who have been scammed not coming forward.

In addition, as some older people have either dementia or cognitive impairment, this may alter society's perception of what being old means, despite the fact that true mental decline does not happen until the last few months of an individual's life. This inaccurate perception can also impact on older people's willingness to come forward.

To counter this, it has been suggested that campaigning approach (perhaps in the same form as that used to encourage people to come forward for bowel screening, or to catch cancers earlier). This could be in the form of posters, TV or radio.

We are conscious that General Practitioners do broach the subject of Power of Attorney for those individuals who may have cognitive impairment but still have capacity to sign a Power of Attorney, and this should be encouraged, rather than legislated.

Doorstep Interventions

Police Scotland, Age Scotland and UK, Neighbourhood Watch, and Local Authorities and others continue to work to combat doorstep scams and to get the message out, this is however hampered by limited budgets and varying competing priorities.

It has been suggested that this could be combated in part by the re-introduction of Community Police, more so for those people who may perhaps be housebound or those who interact less with the outside world.

Familial/Abuse of Trust Interventions

This is a difficult area to solve, as this mostly happens "behind closed doors". It could be something as simple as a son doing his mother's shopping on a weekly basis, spending say £35 on messages, and retaining £15 for himself for cigarettes/drink to large scale abuse where thousands of pounds may be diverted from an elderly parent to a grown up child's bank account. This may be as the child is the parent's carer and feels that they have "earned it". Equally, the perpetrator may not be a member of family, but someone who has inveigled themselves into a trust relationship with the individual.

Non-familial abuse in its various forms are discussed further below, however of most import in combating familial abuse are Adult Support and Protection within the Local Authorities and Social Care Partnerships. Their work ensures that individuals do not suffer financial harm from what are sometimes their "nearest and dearest". Government needs to ensure that Councils/NHS Scotland have sufficient budgets to ensure that they can continue to provide this protection.

Financial Controls

While the Banking Protocol is quite effective, it is also patchy and works less well in some parts of the country compared to others. It only applies to in-branch transactions and we believe that it would be useful to extend this to telephone or online banking. Use of AI or customer profiling may have to role to play in this.

The loss of bank branches will undoubtedly have an effect on the number and type of these scams, as local knowledge of regular customers is lost. To counteract this, we are aware that some banks do direct customers from branches that have closed to the local Post Office and this should be further encouraged.

Work is ongoing by the Baking regulator with regards to payments architecture and confirmation of pay. This is currently voluntary for business to offer to their consumers, although it is mandatory if a bank receives a request from another bank. It was suggested that perhaps this should be made compulsory for all transactions.

In addition, last November the Banking Regulator announced that they would be introducing a contingent reimbursement scheme. This scheme looks at who was at fault and who could have done more. The scheme needs to be clear for thresholds, for standards, and what the consumer has done and what banks need to have done to show that they have done everything that they have to stop a scam.

We are unsure if there are any other stakeholders involved in this scheme but it has been recommended that encouragement of early action by the Regulator to bottom out how the scheme will work in practice.

Internet Interventions

With regards to internet fraud, it has been suggested that as well as the current efforts being made that encouraging intergenerational contact ie grandchildren teach their grandparents how to send an email, how to spot a scam, and gain general internet "savviness".

This could also help combat some scams and educate older people on how to spot adverts (which can sometimes contain scam content as was evidenced in the charging for renewing TPS), rather than free content.

One particular example relates to Romance Fraud. There is potentially a greater role for dating websites in terms of spotting fraudsters with fake profiles using their systems, making it easier for users to be able to spot fraud and report it. In addition, some Fraud originates through Facebook through scammers setting up false profiles. This is a company with large resources, that could have an important role and that could be doing more.

There is perhaps a role for Government to play in tighter regulation of social media and internet platforms which are currently not see as being robust enough. These multi-million pound international companies could be the platform that scammers choose to use, and responsibility should fall at their door for due diligence when individuals are using these services to sell or sell a service which, when it fails, could lead to financial harm.

There is no doubt that as each generation is become more technologically aware, the increased use of the internet for a range of tasks, including (but not limited to) business, research and education purposes, personal banking and to engage in social media, etc increases the risk posed by scammers. Some time has passed since the introduction of the internet 28 years ago and over time it has become the norm for individuals to sign up to end user licence agreements (EULAs) in order to be able to access various software programmes.

However in order for individuals to now be able to access online services and use certain apps, they have had their personal data commoditised i.e. in order to be able to use a service and/or app they may have to give access to their contacts, location, messages, microphone, camera, metadata related to phone calls and SMS, and browsing history.

This personal data is sometimes given away at the "click of a mouse" with few taking time to read the terms and conditions and or the privacy policies of app providers. This is influenced in no small part by the unwieldy length of these documents, and a design akin to a EULA being used to "settle the nerves" of even the most privacy-concerned user.

Little or no thought is given to how this personal data may be used in future or how it may be shared (potentially with third parties/global third party providers or contractors who may not have the same data protection legislation as the UK/EU). Similarly, individuals may not be aware of how their personal data can be used to profile them, not only by legitimate sources but also by those who may intercept it nefariously.

With the introduction of the General Data Protection Regulation on 25 May, it is hoped that this will go some way to better protecting individuals' data. However, there will be an ongoing role for government in directing policy, best practice and prevention campaigns to not only make individuals more aware of the impact of the "click to join", "click to agree" buttons (and the sometimes too easily earned but not always justified trust we have in software/app providers), but also to have an influence on the sometimes unnecessary commoditisation of individuals' data.

Pension Interventions

Pension scams can happen as a result of pension schemes being set up with the purpose of scamming people. All that is required is that a Trustee can pass the HMRC and regulator bar. There are no real barriers to entry and you don't have to be deemed fit and proper. Legislation should be tightened up to ensure that all Trustees are properly vetted prior to being appointed.

Authorised Financial Advisors details are available from the FCA website and appear as "Active" if a search of their name is undertaken. However there is no facility to check if an FA is "passporting". This is where an individual may be working for a legitimate company but they may be operating illegally within the UK.

It has been suggested that the FCA close this potential loophole by ensuring that individuals who are passporting can also be checked on the FCA website as well as domestic providers.

Postal Services

Royal Mail have been collaborating with many of the stakeholders we have spoken to during the consultation process, however they are legally constrained in what they can do. They have had successes in stopping big shipments at airports from overseas, however cannot currently do the same for the domestic market. We would postulate that most scam mail is posted using Response Services Licences or another Royal Mail product.

As these Licences and their stationery have to be approved by Royal Mail prior to use, could not the same apply to the content of large bulk mailings (perhaps over 250 items)? This could also be applied to their "Walk Sort" items.

The use of "No cold calling" zones could be widened and made easier.

Telephone Interventions

With regards to telephone scams, earlier introduction of SIP lines to all households will ensure that domestic scamming is reduced significantly, if not eliminated totally. In addition, the work being undertaken by the banks and mobile providers with regards to text message accumulators will also help.

This is not the case for non-domestic calls and we would encourage governments to work together with their foreign counterparts and their telecoms providers to find a solution.

Justice for Victims

The Courts could play a stronger role, as currently, in particular where the perpetrator of a scam is given a community payback order rather than a custodial sentence, this can reflect negatively in personal and community confidence. The disposal does not reflect the gravity of the situation and sends the wrong message out. This happens, despite the use of victim impact statements.

One of our consultees suggested that if someone "fleeces" a member of family for £100k, public expectation would be that you should go to jail and that they were never surprised by a sentence in court.

This can have a reputational impact on collaborative crime prevention/intervention/ care and support as the public will generally see that the system is not working correctly.

Joining it all Up

There is a feeling that there are many players and also a disjoint between the various groups trying to tackle scams/frauds in that:

• BEIS is responsible for mass marketing;
• the Home Office is responsible for fraud;
• the Department for Culture, Media and Sport (who fund Scotland too) are responsible for nuisance calls which are also scams;
• the Department for Health;
• Local Government Association – Social Services and Local Authority responsibilities;
• Ministry of Justice – sits above social care and public health;
• Office of the Public Guardian.

The general feeling is that everybody is in the same space talking about the same thing, but calling it different things, and there is no real strategy between these organisations. The message needs to be consistent.

Consultees highlighted a confusion about who owns what in cyber enabled crimes ie from the National Crime Agency, City of London Police, local police Forces, to Action Fraud, and that policing has really struggled to have a comprehensive response to it.

In addition, there appears to be challenges about policing response to fraud i.e. from frontline officers, to dialling 101 – the response is to report to Action Fraud, who take your details, put you on a database, and that no-one knows what to do, or use or investigate at a local level.

A comment was made that Police are still using 20^th century tactics to solve 21^st century crime and that all Police officers now need to be able to understand online crime as much as offline.

Some of the above suggestions have no cost implications and others may have significant cost implications,