Challenging fraud behaviours – a matter of national prosperity

Cifas’ annual Fraud Behaviours Survey – research into public attitudes to committing fraud – is a useful bellwether into society’s attitudes to lying for financial gain. 

Year-on-year our fraud behaviours work has demonstrated a growing normalisation of fraud by the UK public and the findings in the latest survey are no exception. Nearly half (48%) of survey respondents felt that it was ‘reasonable’ to commit first party fraud – when an individual supplies false information or misrepresents their income to receive services or goods they are not entitled to – and 1 in 10 admitted to committing some form of first party fraud in the past 12 months. 

Whether making false representations on mortgage applications, claiming Single Person Discount on Council Tax, or claiming refunds for goods actually received it is clear that this behaviour is increasingly being tolerated by society, with those aged between 25–34-years-old most likely to commit first party fraud, according to our research. 

Attitudes to first-party fraud appear to go hand in hand with the growth of other dishonest behaviours across society, including shoplifting. Although these crimes are often seen as ‘victimless’ and ‘fair game’, they are in fact a drain on our national financial wellbeing, resulting in higher costs to businesses which are then passed on to consumers through higher prices. Fraud against the Public Sector also directly impacts communities who rely on increasingly scarce resources. 

Addressing society’s acceptance of first party fraud 

Despite the growing scale of the problem, first party fraud has been largely ignored in the UK fraud discourse. It is tempting to view this issue as a symptom of modern-day digital life which we simply must learn to live with. Without some significant action to change behaviours, it will certainly remain so. 

However, to do so would be to ignore a significant drag on our national prosperity and growth and a drain on already over-stretched public finances. With the Government now working towards a new Fraud Strategy, what are the practical measures this might include to tip the risk/reward equation in the minds of the UK public on first party fraud? As ever, there is a role for both the carrot and the stick.  

As regards the carrot, there is a clear need for increasing public knowledge that certain behaviours constitute fraud – our survey demonstrates that public awareness regarding what is illegal is low. However, changing attitudes through admonishment is rarely effective in behavioural change. Rather than this, the new Fraud Strategy should launch a strategic communications campaign ‘re-branding’ refusal to commit first party fraud as a ‘pro-social behaviour’ – as a model of behaviour which benefits society as a whole – e.g. by refusing to commit fraud, you are supporting the UK’s prosperity and growth. 

But the carrot alone is rarely effective, with some element of stick necessary to act as a deterrent to those tempted to offend. It is clear from the growth of first party fraud over the past decade that individuals committing it have no fear of repercussions or consequences. 

More bobbies on the beat won’t solve the first party problem – collaboration is key 

That is not to say that we should expect a policing response to every instance of first party fraud, which would be both disproportionate and unrealistic. However, for too long, we have seen individuals funding their lifestyles through persistent first party offending, without fear of consequences. This is particularly evident in cases of online retail refund fraud (falsely claiming an item of clothing had not been delivered to obtain a refund) and chargeback fraud (making a purchase by card and later claiming that this was not authorised), as our research suggests. 

It is essential that the next Fraud Strategy identifies clear public-private partnerships to tackle this type of fraud and create the necessary deterrent – potentially through private funding of policing responses – in line with the established model in other areas, such as the Dedicated Card and Payment Crime Unit in the City of London Police. 

Beyond Government action, there is certainly more that can be done at a cross-industry level to identify both persistent bad actors as well as patterns and trends to drive industry-wide prevention efforts.  

At Cifas, we are committed to playing a key role to support our members and the wider industry in tackling this challenge. For example, we recently won the Innovation Partnership Hackathon with proposals for an ‘Events Database’ to track chargebacks/refunds, which we will be developing further over the course of 2025/26. Despite the alarming trends identified in our Fraud Behaviours Survey, there is certainly action that can be taken both by Government and industry to challenge the growth of first party fraud. We will be working hard to highlight this issue as the Fraud Strategy develops and to work with our members and partners to lead the industry response. As a nation, we simply cannot afford not to.   

This article first appeared in Credit Connect