Cracking the Case: Uncovering the cost of small business crime

Foreword

Small business crime is often overlooked – it doesn’t make headline news or Parliamentary debates. As such year after year, election after election, small business crime is forgotten. In 2019, FSB published Calling Time on Business Crime, the report highlighted the corrosive impact of business crime on small businesses across England and Wales.

FSB research shockingly and conclusively shows a rise in threatening behaviour, intimidation, and or assault over the last four years, alongside increased reports of serious organised shop theft. This problem needs swift attention if we are to protect and support vulnerable small businesses and those who work in them. The publication of the Government’s Anti-Social Behaviour Action Plan is welcome to help focus resources; however, more could still be done at a local level to protect small firms in their communities.

Fraud is now the most common crime in the UK, costing almost £7 billion a year. Worryingly, incidents of small business cybercrime have more than tripled, highlighting the ineffectiveness of measures taken against business crime to date. Small firms find themselves abandoned and increasingly exposed. Fraud accounts for 41 per cent of offences in England and Wales, with only 1 per cent of police resources dedicated to it. There needs to be a greater focus on the impact of fraud on small businesses and a commitment to support smaller businesses to tackle it, as it can not only be life changing for the business owner but have a negative impact on the local economy.

Small businesses are not complacent; they are taking measures to protect themselves. However, given the severity of the damage and fallout from crime that they suffer this is not enough, and more action should be taken by government, law enforcement and wider industry to help tackle business crime. The difficulties around reporting and calculating the impact of crime can also lead to resources being misdirected. Infrastructure must be put in place to enable forces to classify business crime.

Greater collaboration between forces and support from national leads is needed. Data from Action Fraud also needs to inform the allocation of police resources locally and nationally, and greater responsibility should be placed on online services through requiring implementation of greater security measures.

Small businesses are affected by crime, directly financially and indirectly through wider social and reputational impacts. Criminal acts against small businesses act as a barrier to their growth and innovation. Small business crime is not a victimless crime. It impacts business owners, staff, and local communities and ultimately local and national economic growth.

Key findings

[Image text] traditional crime has cost more than £10,000

[Image text] 81% have experienced business crime

[Image text] 20% lack confidence in police/Action Fraud

[Image text] 72% have experienced cybercrime

[Image text] 56% have invested in cybersecurity and anti-fraud measures in the last two years

[Image text] 1.89m have experienced fraud in the last two years

[Image text] 92% of the most frequently reported cybercrime is phishing

[Image text] 26% have experienced unauthorised payments from bank cards/accounts

Executive summary

This report covers crimes experienced by small firms from January 2021 to January 2023, some of this period overlapped with coronavirus pandemic and government instructions to limit social contact. Coronavirus restrictions led to fewer incidents of crimes such as theft and robbery, which is reflected in our research.

The report includes insights gathered through in-depth survey work and qualitative evidence collected from interviews with small businesses in England and Wales.

This report covers three types of crime:

• Traditional crime refers to traditional, physical-world crimes such as theft, burglary, arson etc.
• Cybercrime refers to criminal acts that involve causing damage to computer systems, internet-enabled devices, or the information held on those devices, or gaining unauthorised access to online accounts such as banking, email or social media etc.
• Fraud refers to the use of trickery or deception in order to gain personal or financial information.

Traditional crime

Traditional crime has continued to affect the small business community. Crimes such as anti-social behaviour, burglary and theft have continued to plague the lives of small business owners. Small businesses that suffer from traditional crime are more likely to report a financial impact than from other types of crime, with majority costs attributed to fixing damage to property and replacing stock. To aid prosecution and tackle organised crime a single online portal should be introduced which would allow business complainants and other victims to submit witness statements and simple evidence such as CCTV images directly to the police. This would enable cost savings in terms of police resources as well as help to identify organised and prolific offenders.

Cybercrime and fraud

The disruption that small businesses face considering rising cybercrime and sophistication of fraud incidents continues to be a challenge. From the persistence of phishing emails, which many small businesses have been affected by over the last two years to almost a third that have experienced invoice fraud. Small businesses and self-employed entrepreneurs typically have more limited time and resources than their larger counterparts, which increases the risk of inability to detect exposure to criminals operating online.

However, small businesses are not complacent. Our evidence shows that more than half of small businesses have increased their investment in cybersecurity and anti-fraud measures over the last two years. Despite this, small firms should not carry the burden of cybercrime defence alone. The government should require online services such as online platforms, social media platforms and e-mail providers that hold personal and financial information to enhance their security measures by, for example, introducing multi-factor authentication to prevent the hacking of online accounts.

Policing and reporting crimes

Small businesses that have experienced traditional crime are more than twice as likely to report crime to the police than those who have experienced fraud or cybercrime. For those that do not report crime, the most common reasons for not reporting a crime include it not being serious enough to report and a lack of confidence in the police.

Introducing a mandatory recording process for business crime similar to that of assault and burglary will improve crime data in England and Wales. This will help to drive better outcomes for businesses and the police through more efficient and targeted resource allocation. 

Download the full report below