If you fall for a scam, there’s more than one way to recover your losses

I’ve fallen for scams twice in my life and at the time, my sense of anger was only matched by my feeling of stupidity. I’m not the only person to feel this way and as my colleague David Martin highlighted in his article last month, 1 in 5 businesses in the United Kingdom fall prey to frauds each year. The types are endless – advance fee frauds; overseas real estate; commodities; boiler rooms; carbon credits; discount loans; fictitious innovations; you name it and the fraudster will offer you it! Sometimes the losses are significant and what is surprising is how most firms write off the loss and almost never report the crime. The latest research by the Fraud Advisory Panel (FAP), the independent voice and leader of the counter fraud community in the UK, suggests there is more that can be done.

Assessing the risk of fraud is something the majority of business owners do when in the early stages of the procurement cycle or when seeking to expand into foreign markets. However, how much consideration do owners give as to what to do when they become a victim of fraud, and how they seek to combat it and retrieve their losses?

The problem with the criminal justice system:

Perhaps the obvious consideration is to go through the criminal justice system. However, there are number of serious deficiencies with this assumption:

  • Only a tiny number of frauds are reported and a small fraction are investigated
  • Only one in four convicted fraudsters are ordered to pay compensation
  • Criminal prosecutions can be dropped for a number reasons and at several different stages
  • Fraud cases take roughly three times longer than other criminal cases
  • Fraud cases are still nowhere near being a police priority – in the UK or elsewhere

Added to these factors, there is what Ros Wright, Panel Chairman of the FAP describes as a “woeful lack of initial crisis help and guidance for victims”.

Civil Litigation:

In a new series of research-based publications entitled ‘Obtaining redress and improving outcomes for the victims of fraud,’ the FAP is seeking to raise the profile of civil litigation as a means of bringing fraudsters to justice.

However, there are two big hurdles in doing so. The first is raising awareness, not just among business owners but also among police, lawyers and accountants – the very people victims to turn to for help – that the most effective means of obtaining redress and prosecuting culprits of fraud may be via the civil route.

The second obstacle is cost. At the moment, civil justice is beyond the financial means of many individuals and small businesses, thus “leaving the UK’s individual and smaller business fraud victims severely disadvantaged,” according to Wright.

The FAP-led initiative, ‘Access to Civil Justice,’ suggests opening up civil courts to many more cases of fraud and having them assess how the needs of victims may be better accommodated. Further, it is also proposing a scheme that would see fraud cases being referred from the criminal justice system to the civil.

The threat won’t go away

Many risks can be minimised by conducting thorough due diligence and at Today Translations, our language and cultural awareness strategies and translation services form a integral part of this. Our global team of linguists are available to help maximise your potential in foreign markets – and avoid risks such as falling prey to scams when expanding into new unfamiliar markets.

If you are one of the many victims who has fallen prey to fraud, you will probably share my desire not to see others suffer. The FAP research provides a great insight into the current situation, explains all the avenues open to victims and provides hope for an improved system to recover losses as a result of fraud and is well worth the read. See www.fraudadvisorypanel.org for this and other free advice.

Sectors: Insurance and Professional Services
Countries: United Kingdom
Topics: Insurance & Risk
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