Scam victims in the UK suffer a hit to their well-being that can be calculated at £9.3bn a year, new research from Which? has found.
Which? launched a new study amid concerns that the full impact of all scams on victims has been seriously underestimated. To date, attention has been largely focused on the most serious financial losses, while the significant psychological harm experienced by victims who lose smaller sums or get their money back has been neglected.
Which?’s latest research – conducted with consultancy Simetrica-Jacobs – finds there is no such thing as a ‘victimless crime’ when it comes to fraud. It establishes that being a scam victim is associated with lower life satisfaction, comparable with being threatened or targeted by thieves.
The consumer champion analysed more than 17,000 responses to the Office for National Statistics’ Crime Survey for England and Wales to establish the well-being impact associated with being scammed. The results were then applied to an approach to assessing social impacts approved by the Treasury earlier this year. The model allows researchers to value changes in well-being in monetary terms.
As well as a drop in life satisfaction, the research found being a victim of fraud was also associated with significantly higher levels of anxiety and lower levels of happiness. It was also associated with people self-reporting worse general health, although to a much smaller degree.
The research found the estimated average drop in well-being for victims of fraud is the equivalent of £2,509 per year. This estimate is even higher – £3,684 – for online fraud.
This well-being impact is substantially more than the average financial sum lost to fraud, estimated by Which? as around £600.
When these calculations are applied to the 3.7 million fraud incidents in 2019-20, they suggest a total loss of well-being associated with fraud victimisation of £9.3 billion per year. Online fraud specifically was associated with a well-being impact of £7.2 billion.
Which?’s Director of Policy and Advocacy Rocio Concha will set out the findings to MPs on the Draft Online Safety Bill Joint Committee in an evidence session later today (Monday).
The government’s draft Online Safety Bill seeks to establish a new regulatory framework to tackle harmful content online, including content that has a significant adverse physical or psychological impact on users. The draft Bill includes measures to tackle user-generated fraud like romance scams, but omits the scam adverts used to hook in thousands of victims of investment fraud and other cyber-enabled scams every year. Which? continues to receive regular reports of victims who suffer significant financial and psychological harm as a result of this crime.
Consumers lost more than £100 million to investment fraud, which often starts online, in the first half of 2021, according to UK Finance. It has increased by 95 per cent as fraudsters have matched their tactics to a surge in shoppers and investors moving online during the pandemic.
Which? believes government plans to tackle online scams are not comprehensive enough to deal with the threats faced by consumers and do not reflect the scale and urgency of the problem.
It is calling on the government to include scam adverts in the Online Safety Bill as the first step towards ensuring new laws and regulations make online platforms take responsibility for consumer harms like fraud, sales of dangerous products and fake or misleading reviews.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“Our research shows that scam victims suffer a significant drop in well-being when they are targeted by criminals. This brings home the scale of the emotional and psychological harm that victims suffer when they are defrauded.
“The government must not ignore the huge impact an epidemic of fraud is having on our society. Scam adverts must be included in the Online Safety Bill and ministers must set out plans for laws and regulations that will make online platforms use their highly sophisticated technology to effectively tackle harmful content on their sites.”
Notes to editors:
The research uses data from the Crime Survey for England and Wales, which is run by the ONS every year and asks around 35,000 people about their experiences of crime in the past year, including fraud. Only a subset of around 6,000 participants in this survey are asked about their subjective well-being each year. Therefore in order to get a robust sample size of victims, we combined three waves of data from the survey running from 2017/18 to 2019/20 (year ending March). This gives us a total sample of: 17,186 people, of whom 1,094 had been a victim of any fraud and 533 had been scammed online.
The research shows that being a victim of a scam is associated with lower personal well-being, after controlling for a range of factors commonly linked to well-being (e.g. age, gender, education, employment status). On our core measure of life satisfaction, we find that being a scam victim is associated with a reduction of 0.17 points on a scale of 1-10, while being an internet scam victim is associated with a 0.24 point reduction in life satisfaction on a scale of 1-10, although the difference between the two estimates is not statistically significant. While these reductions in well-being can seem fairly modest, they are only moderately lower than being victims of other crimes like being threatened (-0.24) or experiencing theft (-0.26). Fraud victimisation was also associated with higher levels of anxiety (0.21 points on a scale of 1-10), lower levels of happiness (0.16 points on a scale of 1-10) and with lower self-reported general health, although to a much smaller degree (0.029 points on a scale 1-10).
HM Treasury has published supplemental guidance on the use of well-being in policy appraisals and evaluation, including on how changes in well-being can be valued. This guidance estimates that a single point change in life satisfaction can be worth between £10,000 and £16,000 per year.
This work contains statistical data from ONS which is Crown Copyright. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research datasets which may not exactly reproduce National Statistics aggregates.
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