Fraud losses at record high

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It’s not just the victims that lose out in fraud cases – the cost to the country in 2008 reached £2,635 billion, exceeding the UK’s GDP for that year, according to a report by MacIntyre Hudson LLP and the Centre for Counter Fraud Studies at the University of Portsmouth.

“The evidence in this report shows that any organisation should expect its losses to be in a range of 3% to 9% in a tough economic climate”, said Jim Gee, director of Counter Fraud Services at MacIntyre Hudson.

“Tackling fraud and error effectively is one of the least painful ways of making cost reductions and the evidence shows that return on the costs of the work can be as high as 12 : 1”, he added.

Gee also argued that reducing losses to fraud and error should be an i...

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25th Nov 2009 13:18


AWEB I think you have misinterpreted the result of this academic study.

The figure you quote is an estimate of the GLOBAL cost of fraud and error - not the cost of fraud and error in the UK.  The authors had a particular interest in fraud within healthcare and also commented specifically on that aspect.

So your headline "Fraud loss in the UK execeeded the country's GDP in 2008" should instead read "Global losses from fraud and error exceeded the GDP of the UK in 2008".

To quote Jim Gee, one of the report's authors:

"This is the first such Report which has been published and represents the most in-depth look at the real global cost of fraud ever undertaken. The Report has reviewed 132 exercises to accurately measure fraud and error losses, covering 32 different types of expenditure totalling almost £800 billion, in 44 organisations from 9 countries. The average level of losses has been found to be 4.57% (with two thirds of the exercises showing losses of between 3 – 9%). 

Taken as a proportion of global GDP for 2008, 4.57% equates to losses of £2.74 trillion, a sum equivalent to the global cost of healthcare in that year.

The Report has also evaluated many exercises which measure losses to healthcare fraud (finding an average loss rate of 5.59% - higher than the average across all sectors) and many others concerning losses to social security fraud (finding an average loss rate of 5.57%)."

So what the report is saying is that fraud and error losses are somewhere between 3% and 9% in value of all economic activity and that, globally, we 'spend' as much on fraud and error as we do on healthcare.

Of course there is real difficulty in distinguishing fraud (which involves deliberate dishonesty) from error (which may be purely accidental).  The report's figures cover fraud and error.


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