Queen’s Speech

Lord Vaux of Harrowden Excerpts

Tuesday 18th May 2021 Lords Chamber

[Lord Vaux of Harrowden (CB) [V]]

My Lords, I will talk about fraud, which is one of the great scourges of modern life but was largely ignored in the gracious Speech. More than 822,000 frauds were reported to Action Fraud in 2019-20, totalling £2.3 billion, but only a fraction of frauds are reported. It is estimated that the real number is around five times that. That is seven frauds every minute, and accounts for more than a third of all crime in England and Wales. These numbers represent people losing their life savings, their pensions, their house deposits. It is not just about money; being the victim of a scam is deeply traumatic and wrecks lives.

Why has fraud become so commonplace? There are two reasons: it is easy and it is low risk. Why is fraud easy? It is because so many businesses profit from facilitating it and have little or no incentive to stop it. I will give a few examples. Search engines and social media platforms take money to advertise fake pension and investment sites, fake online shopping sites, fake holiday letting sites and so on. To add insult to injury, they then make more money from the regulators. The FCA apparently paid £600,000 last year to post warnings on Google.

Web-hosting platforms are paid to host the scam websites. Telecom providers are paid for the calls and texts that plague us, and make things worse by failing to prevent false caller IDs. The banks are also facilitating frauds. All that stolen money has to be received somewhere, and most is processed through UK bank accounts. Instant payments allow the stolen money to be whisked away through multiple accounts and overseas before the victim has even realised that they are a victim.

Why is fraud low risk? The statistics speak for themselves: fewer than one in 13 reported frauds is actually investigated and less than 4% lead to a prosecution. Anyone who has dealt with the laughably named Action Fraud will understand why that is.

I welcome the fact that the Government have at last agreed that the online safety Bill will cover user-generated frauds, but they have chosen—it is a choice—to exclude most types of economic crime from the Bill, including frauds arising from fake adverts. It is perverse that the tech companies will be responsible for scammers’ social media posts but not for the adverts they are actually paid to publish.

The Government say that they will publish a fraud action plan, but only after the 2021 spending review, and that DCMS will consult on online advertising, but only starting later this year. This is not good enough. Every day that passes without action means more than 10,000 more frauds, more than £6 million more stolen, and more people losing their life savings and having their lives wrecked. We must push the risk of fraud back on to those facilitating it. The big tech companies, telecoms companies and the banks, with all their resources and know-how, could easily find ways to make life harder for the fraudsters, but they have proved that they will not do it voluntarily, so the time has come to create a real financial stick to encourage them.

At the same time, we must stop blaming the victims and make it easier to recover losses. The banks’ voluntary code has failed and should now be replaced with a compulsory code, under which the bank that received and processed the stolen money has to refund the loss automatically. Policing of fraud is critically underfunded. Training and resources are urgently needed so that scammers actually face some risk of being caught and prosecuted.

Fraud has become an epidemic that is wrecking lives. It must be made a much more urgent priority.