2. Setting the Context
This Chapter considers the background and wider context within which this research study has been conducted. It also seeks to set out the scope of the research and some of the issues which have impacted on it.
2.2 Overview Perspective
The context for this research was set out in Scotland's Nuisance Calls Commission Report and Action Plan which was published in late 2017. This identified a focus on three key areas:
- empowering and protecting individuals;
- encouraging better business behaviour; and
- improving government and public agency responses.
The Commission also recognised that "the greatest threat to be tackled is the danger of scam calls, especially to vulnerable people, and that the problem of scams goes far beyond those perpetrated via unwanted calls. As a long term action, Commission members sought a strategic and coordinated response to scams from the Scottish Government and enforcement agencies".
Nuisance calls are generally considered to be one of the banes of modern life with a recent report highlighting that three out of the top four cities in the UK for nuisance calls were in Scotland and that in Glasgow over 50% of all calls were designated as "nuisance calls". While nuisance calls are a real problem for society, it is those that are defined as "scam calls" where the intent is to defraud individuals in some way that can cause the biggest problems.
While there is usually a financial consequence or loss for the individual there can also be wider costs to society including:
- social or health costs;
- emotional costs;
- crime investigation costs;
- Local Authority costs ( Trading Standards);
- time costs;
- data collection costs; and
- technical costs.
It is estimated that 17% of nuisance phone calls are scam calls, that a further 39% of calls are some form of mis-selling, and that only 44% of nuisance calls are legitimate.
2.3 A Definition Discussion
Prior to commencing the detail of the research we sought to define the scope of what is covered by the term "scam" in order to ensure a consistent approach.
Crucially, we do not believe there is a right or single answer to the question and there will be many definitions of "scams". However, for the purpose of this research it is important to state up front a working definition.
Oxford English Dictionary (OED)
plural noun: scams
a dishonest scheme; a fraud.
"an insurance scam"
synonyms: fraud, swindle, fraudulent scheme, racket, trick, diddle; informal con, con trick, flimflam, gyp, kite; grift, shakedown, bunco, boondoggle;
"the scam involved a series of bogus reinsurance deals"
verb: to scam
3rd person present: scams
swindle. "a guy that scams old pensioners out of their savings"
Citizens Advice Scotland
Scams are schemes to con you out of your money. They can arrive by post, phone call, text message or email or a scammer may turn up at your home.
An early finding is that scam is often seen as interchangeable with fraud which is in more common usage. It is also not always (or mostly) based on a telephone call. It can be on-line, doorstop, by post, by text or by individual (eg family member).
However, we would make the distinction that "fraud" is a broader category and can include non-financial aspects or acts of deception carried out for the purpose of unfair, undeserved and/or unlawful gain.
Scams always have a financial element to them and as such can be seen as a subset of both fraud and nuisance calls.
One particular definition was suggested as follows:
- fraud - unauthorised transaction where the victim has no initial knowledge or awareness; and
- scam - authorised transaction where the individuals has been "duped" or tricked in some way.
As Police Scotland state" not all scams are fraud but all frauds are scams". Scams are generally a sub-set of fraud. However, in practice the terms are imprecise and often used interchangeably.
However, we do not believe there is any benefit in over-analysing these definitions and we suggest that for this research scams can be equated to financial fraud.
Scams can be perpetrated on individuals, businesses or Government/ public sector.
- individuals - examples will include:
- electronic fraud
- telephone scams
- building works
- business - examples will include:
- insurance frauds
- mortgage frauds
- advertising scams
- invoice frauds
- procurement fraud
- society/ government
- tax avoidance
- VAT frauds
- benefits claims
- public purchasing.
A more detailed list of fraud/ scam types is provided in Appendix 2.
The focus of this research relates to the individual although we would highlight that this is only one aspect of the challenge. For example, fraud perpetrated on insurance companies will have a knock on effect on individuals as insurance costs rise.
2.4 A Crowded and Complex Landscape
One of the key challenges in undertaking this research is the crowded landscape which can be characterised as follows:
- from a policy perspective, the issue of scams is being seen as increasingly important across the wider landscape with a recognition of the scale and scope of the problem and that the incidences and challenges are increasing;
- there are many organisations already operating in the area seeking to address the issue covering legislative, regulatory, crime and justice, consumer rights, vulnerable groups; local authorities etc;
- some of these are very specific and focus on particular or very specific aspects eg pension scams or individuals with dementia;
- as well as many organisations operating to mitigate the impact of scams there are also many different initiatives being delivered by these organisations - many using different language and different delivery or communication channels;
- there is no robust evaluation evidence as to the success of these initiatives as many of the interventions are quite recent and still current, with no processes in place to measure impact. In fact we are not aware if any of these initiatives have any indicators which are being measured.
2.5 Data Challenges
There are also a number of data challenges in seeking to assess the true impact of scams/ fraud.
Our review has identified a number of different publications, reports and statistics which provide estimates of the scale of fraud, scams and cybercrime in the UK.
However, most do not provide disaggregated estimates for Scotland and additionally, the differing legal systems, police authorities and official data collection regimes mean that estimating the full impact of criminal fraud and scam activity is difficult.
Some data includes business and public sector, some is very specific (insurance fraud only) and some is focused on individual groups (eg vulnerable people).
There are also different data collection protocols and definitions which makes comparison or "read across" complex.
In addition, it is widely stated that most fraud goes unreported and therefore a "true cost" is harder to quantify. For example, different data sets suggest that the level of reported incidences could be as low as 3% with a high end estimate at 20%.
The truth is that we will never know, but we can be sure the bulk of scams are not reported, although it is likely that any data provided could be multiplied by anywhere between 5 and 30 times.
This is considered further in the next Chapter.
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