The cost of driving has risen dramatically in the recent past with crude oil becoming more and more expensive as well as rising prices for driving lessons, sitting a test, road tax and insurance. The lure of owning a car has not been dampened especially for the newly turned seventeen year-old with places to go and people to see a vehicle can be somewhat of a rite of passage. Learning to drive is often a family affair, brave parents give their children lessons themselves or some contribute to the cost of an instructor. Once a child has passed their test, advice often follows from their parents on which car to purchase and who to insure it with. But after having paid to gain a licence and bought a car the price of insurance can be truly astonishing.

The cost of insurance

Currently young men have it much worse than women of equal experience, although this policy of gender discrimination has been ruled illegal by the European Court of Justice. It is unlikely that the result of the ruling will be a drop in male pricing, rather young women should prepare for their policies to rise. As it stands currently the average annual policy for a new female driver is £1869 compared with £3635 for their male counterparts. The costs can often dwarf the price of a car itself and prove simply too expensive to make owning a car feasible.

Another way

The introduction of a new car into the family unit can be useful to all parties. Parents may want some use of the car and would therefore need to be on the insurance as well. Within seeking a few online quotations it would become abundantly clear that by placing the policy in the name of a parent and adding the child as a named second driver the cost of the policy can be reduced dramatically. This practice is called ‘fronting’ and can be very tempting, making a car suddenly affordable. Recent research has established that over a quarter of motorists would employ this method of saving money and one seventh of motorists have previously fronted for their children.

Why not do it?

As tempting as fronting appears it is in fact illegal, although the public seem far from aware of that fact. The same survey showed that 23% of motorists thought that fronting was legal and 33% did not know. Therefore less than half of motorists in the survey were aware of the illegality of the practice.

What are the consequences of fronting?

If a policy is taken out naming a child as the second driver where in fact they drive the car the majority of the time the policy could be invalid. Providing incorrect details in these circumstances can be viewed by insurance providers as fraud and the motorist can be prosecuted for it. A child named as a second driver in these circumstances could be prosecuted for driving with no insurance, not only leaving them with a criminal conviction but driving up the cost of their next genuine insurance premium.

What should be done?

There clearly are circumstances where a child is a second driver and is entitled to be described as such on the insurance policy. The rule has to be to simply tell the truth when insuring a car. If a policy in a child’s own name is unaffordable then it may be the case that they cannot afford to drive at that time and should not be tempted to break the law to do so.

Surprisingly, some of the best tickets for the Olympics this summer remain unsold as companies weigh up the cost of potentially breaching new laws. Following the introduction of the Bribery Act 2010, which came into force on 1^st July, there is evidence to suggest that people in business are dubious about corporate hospitality at events like the Olympics for fear of being in breach of the law, which prohibits “lavish” entertainment.

The purpose of the Bribery Act was to make life difficult for organisations responsible for corruption. However, combined with tough economic times, where corporations do not want to be seen as flamboyant, the Bribery Act has led to companies seeking legal advice before offering or accepting hospitality packages and accordingly, some sponsors are not even taking up their full allocation at this summer’s Olympics in London.

The immediate result of the Bribery Act is that corporations are nervous. Freshfields, who are the official legal advisers to the Olympics, have reported that sponsors have already contacted them, seeking advice on hospitality, such as whether they should pay for travel or whether they can invite spouses.

One of the problems is that there is no definition of the word “lavish” and it is therefore very hard to determine. As a result there is a lot more paperwork involved, with expenses getting signed off at offices before events rather than being put straight on to company credit cards. Sponsors are complaining that the novelty of being associated with events such as the Olympics and impressing clients in this manner is being lost.

Ministers say that the Bribery Act should not prevent businesses from entertaining customers and contacts. They argue that it is up to organisations to be responsible and have procedures in place to determine whether something is going to be a breach or not. Entertaining current clients for example is less likely to be a breach of the Bribery Act when compared to taking a prospective client to a lavish event in order to win their custom. The Justice Department’s guidance is that hospitality which is “proportionate or reasonable” should not breach the Bribery Act.

The Bribery Act is to be monitored by the Serious Fraud Office (SFO) and they have already admitted to not being able to be prescriptive about the boundaries of what is acceptable and what is unacceptable, but they did admit that they would look at add-ons such as extended hotel stays and free travel when determining a breach.

What is Internet Fraud?

A big fear people have when using the internet is they feel they are at risk of being targeted by internet fraudsters. Internet fraud involves the defrauding or taking advantage of people through the use of internet services or software with internet access to then commit fraud or other crimes. An example of this could include renting a flat or taking out a credit card in your name. Internet fraud includes, and is not limited to, stealing personal information (leading to identity theft) and the distribution of rogue security software. These acts normally go undetected until the victim checks their account details and realises these discrepancies, such as charges they have not made.  In order to protect yourself from this you should familiarise yourself with how internet fraud is carried out and how you can prevent it.

How does Internet Fraud Occur?

Internet fraud is a wide spread phenomenon which can occur in many everyday scenarios such as through the use of e-mail, in chat rooms or on websites. It is quite easy for fraudsters to produce credible messages and it can be hard to distinguish between what is real and what is not.

Another way fraudsters can obtain your information is by planting viruses on a victim’s computer which in turn can monitor and log the keystrokes made. By collecting this information it can give fraudsters control of your machine remotely.

Phishing, another common way of obtaining information, involves trying to gain sensitive information such as credit card details by pretending to be a trustworthy entity. The most frequent way phishing will present itself is either in e-mails or via instant messages. They normally redirect potential victims to fake sites where they ask them to enter in their details. These sites usually look and are almost identical to the real sites they are impersonating. In terms of e-mails they are usually sent to appear to be from a legitimate source such as social networking sites, banks or online payment processors.

How to Avoid Internet Fraud

Try and avoid making transactions using money orders. A safer option is to use electronic transfers. Check your credit card/debit card statements often to make sure that there have not been any unexplained charges to your account.

You should always think twice before you release personal information because once the fraud has occurred resolving the issue could take a lot of time and money to repair the damage. For instance, if a fraudster takes out credit in your name, this can lead to you getting a bad credit rating which can affect you in the future when you try to take out a loan for a house or a car.

You should be careful with the information you share on social media sites and use caution when publishing personal details about yourself. Restricting information, such as your date of birth and other family information, will go a long way to preventing fraudsters from accessing important information about you. It is a good idea to review your privacy settings frequently as media sites often update their privacy rules and procedures. This could affect the security of your information on your profile. This also applies to groups and applications which you add to your profile.

Another important issue arises from this – the use of secure passwords. Do not reuse passwords on different sites, as not all sites are secure. This means that if the site is compromised and your password is retrieved having a secure password will not protect you, which could be a big problem for you.

Phishing attempts can be spotted by carefully looking at the links sent in e-mails and the e-mail addresses they come from and check to see if it is addressed to more than one person. Some phishing attempts are easier to spot than others. For example, e-mails may contain obvious misspellings and may be poorly formatted. However, others can look deceivingly real, so ensure you check the URL before you click on the link by hovering your mouse over the link. This will show you the real URL which you will be redirected to. You should also take advantage of security and privacy technologies such as digital signatures and data encryption and delete any messages straight away which you suspect could be a phishing scam.

What to do if you Suspect you are a Victim of Internet Fraud

If you suspect you are a victim of card fraud contact your issuer immediately. You can also contact the national fraud reporting centre, Action Fraud, or your local Citizens Advice Bureau for more help and information. Alternatively you can contact the police.

Fraud can occur in every walk of life and happens to businesses and individuals alike. If you need advice on the law as it relates to fraud then you should contact a solicitor who can assist with this.

What do the laws on fraud say ?

Fraud laws used to be quite awkward to locate and difficult to use in prosecutions and as a result Parliament passed the Fraud Act 2006, which went some way to amending the old fraud laws. It, for instance, repealed some deception laws that were difficult to prosecute and introduced some new laws to account for changes in technology and the way in which fraud takes place.

The legislative measures were a good start. Fraud is now one offence which can be committed in three ways.

Forms of fraud

The first way of committing fraud is by false representation. A person commits fraud through false representation if they dishonestly make a false representation and intend to either gain by that loss, cause loss to another or expose another to risk of loss. A false representation is a representation that is untrue or misleading and one which the person making it knows it to be untrue or misleading.

Fraud can also be committed by failing to disclose information. This type of fraud occurs when a person fails to disclose information which they are under a legal duty to disclose, or fails to disclose information with the intention of making a gain or causing loss.

Finally, the third way of committing fraud is by abuse of position. A person is guilty of this type of fraud if they occupy a position in which they are expected to safeguard the financial interests of another person and they dishonestly abuse that position. In order to be convicted a person must intend to make a gain or cause another loss. The offence of fraud carries a maximum penalty of ten years’ imprisonment.

The Fraud Act also creates offences for possession of articles for use in fraud and making and supplying articles for use in frauds. These sections are largely used to prosecute people who make, supply or use the extensive technological equipment necessary for card fraud and bank fraud. Prior to the Fraud Act it was very difficult to prosecute for such offences.

Legal advice

If you have been a victim of fraud then it is essential that you find a solicitor who can help you. A specialist solicitor will be well acquainted with the law and can ensure that your interests are looked after.

Moreover, if you are accused or suspected of fraud then you need to find a solicitor who can defend you and explain your legal rights. Legal advice should always be taken as early as possible.

BDO are a large and well respected accountancy practice in the UK. Like many accountancy practices, they now offer a range of services including fraud investigation and forensic analysis services and for some years they have published data about fraud. Their latest report has some interesting findings, and implications :-

• BDO’s report claims that reported private sector fraud in the UK exceeded £2 billion for the first time in n 2011
• The above represents a massive 50% increase from 2010.
• The retail sector saw the biggest rise in percentage of the reported fraud, up to over 10%

 Increase in fraud doe to be an unfortunate side effect of harder economic realities, although it may also reflect changing societal values, as evidenced by the plundering in the riots, the problem of insurance claim and personal injury fraud, mortgage application fraud and so on. Interestingly, BDO also suggest that the true scale of fraud may be 10 times higher or more, as the majority of businesses either don’t have any or sufficient measures or procedures in place to find fraud or they do not report it. The reasons why they do not report fraud are complex and multifarious and perhaps appropriate for a separate blog post !

For more on the BDO report, click the link.

What do you think of these figures and developments, or about the causes of fraud and whether it has become a bigger problem in our society ? We’d love to have your views.

The House of commons Public accounts Committee have published a report which claims that scams and frauds (is there any difference ?) are taking up to £7 billion annually from the pockets of already stretched consumers in the UK.

Much of this fraud is now apparently being achieved online, where regulation and application of the law is still trying to catch up and there is something of a “goldrush” or “wild west” effect still ongoing. Chip and pin, identity and credit card fraud are also big and overlapping problems according to the report.

There is a double whammy effect in that law enforcement agencies, such as the Office of fair Trading and the Serious Fraud Office, let alone regional police forces, are all having their budgets slashed, which is only likely to result in the problem getting worse. Many would also argue that financial crime is increasing in line with a decline in moral standards where there is a get rich quick or gotta have it culture. The riots and wanton looting in London over the summer were certainly indicative of much of a consumer society gone mad as of a disgruntled population for political reasons.

When we talk about scams and inappropriate tactics which perhaps fall somewhere short of the legal definition of fraud,  as regards defective goods, dodgy doorstep selling tactics and such like this again is a multi billion pound problem. Research suggests that to counter this, last year the Government only allocated  £34 million on consumer protection, with deterrents being low in terms of fines and punishments for bad practice. It looks like we are fighting a losing battle.

What are your thoughts on these issues ? Please do let us know and relating to any instances you have suffered of fraud or scams, but no names please !

Interesting report in The Sunday Times yesterday, relating to the latest boiler room frauds:

Conmen target investors with environmentally friendly schemes.

They create a name at Companies House with a mailbox address.

Genuine Share Certificates are issued relating to that Company in order to own forestry plots. The investments are however bogus, or worthless.

A number of boiler rooms were set up overseas, particularly in Spain.

People interested in ethical investments are targeted via the media, their own websites, and Charitable organisations. A ’sucker list’ is then compiled.

Boiler room staff are employed to make contact with people and organisations from the sucker list by telephone. These people, referred to as ‘fronters’, call and make the initial pitch.

This call is followed by a ‘closer’, who finalises the purchase of shares in a Company.

A final call is then made by a ‘verifier’ who states what rights you have, in order to comfort and re-assure you that what you are purchasing is genuine.

Your money is then sent to an overseas bank, but is typically laundered through a network of various accounts all over the world.

The result is that most investors have lost life-savings and/or their houses.

Those affected by this boiler room fraud included a Judge, Lawyers, Accountants, and other Professionals.

The Financial Services Authority (FSA)  warn people not to deal with Companies that are not registered with them. The FSA also lists unauthorised companies that have been the subject of complaints, ranging from brokers offering shares in suspect energy companies to companies trading in carbon credits.

The FSA recommends that consumers avoid any investments offered by a cold call or unsolicited letter.

The writer is Partner and Head of Litigation at Darlingtons. David Rosen is a working member of the Fraud Advisory Panel, an Associate Member of the Association of Certified Fraud Examiners, and a visiting Associate Professor of Law at Brunel Law School, Brunel University.

I begin with a brief outline as to why people may commit fraud.

According to the criminologist, Donald R Cressey, there are 3 factors that present the appropriate environment for fraud to occur within an organisation:

•  Unsharable financial need: living beyond one’s means, and the desire to maintain an unrealistic lifestyle;
• Rationalisation of fraudulent behaviour (i.e. Thinking that where you work can afford or will not miss what one takes)
• Perceived Opportunity: the opportunity for fraud to present itself, and the likelihood to get away with it.

These concepts can be further analysed by behaviour characteristics, and through various other theories:

In the Fraud Advisory Panel 12th Annual Review 2010, they refer to ‘People Risk’, and the do’s and dont’s of pre-employment screening:

As a non-exhaustive illustration, all employees should be screened as to their financial status (via credit checks), the amount of time they have lived at their Property, the time they spent previously in full-time employment. What you should be looking for is commitment to previous work, relationships, and stability in residence.

One should check for any previous criminal convictions, having regard to the Rehabillitation of Offenders’ Act.

Always take up references and follow up any that do not materialise.

Do their CV’s add up ?

Check for ambiguity in dates and qualifications. Check for changes in the following:

• are there noticeable signs of drugs problems ?
• drinking issues ?
• matrimonial problems ?
• money issues ?
• resentment or unrest in the office ?
• general unhappiness ?
• sudden purchasing of luxury goods ?
• going away on luxury holidays ?

Do you know what to look for?

Do you have checks in place? Are you giving your employees an opportunity to steal from you? Do they think there is an opportunity to do so?

Further articles in anti-fraud will identify various frauds in the workplace, what signs to look for, what checks to have in place, and how to deal with such issues when they arise.

David Rosen is Partner and Head of Litigation at Darlingtons and an expert in commercial fraud. He is also a working member of the Fraud Advisory Panel, and an Associate Member of the Association of Certified Fraud Examiners.

New fraud research from accountancy giants KPMG suggests that fraud has become increasingly prevalent. As a quick guide to KPMG’s research for the year 2010, here are the main findings :-

• Although Government is the biggest target for fraud with over £800 billion losses, the private sector figure, at nearly £270 million is also high and has increased since last year by more than  30%.
• Internal fraud by staff accounted for £225 in the first half of 2011 compared to just over £180 million for the corresponding period in
• KPMG recommends businesses do more to prevent and identify fraud, with practical suggestions including whistle-blowing lines and more regular internal financial audits.