Traditional crime, including organised shoplifting, drained more than £1,000 from over half of small business victims across England and Wales in the last two years, with one-in-ten losing in excess of £10,000 according to new research by the Federation of Small Businesses (FSB).
FSB’s Cracking the Case report, published today, shows how small businesses are facing a double whammy of virtual and physical crimes, with an overwhelming 81% - or 4.1 million – of them in the two nations affected by at least one crime between January 2021 and January 2023.
That’s a jump from 49% in the same period between 2017 and 2019.
The flagship report also revealed a growing number of reports of organised shoplifting and threatening behaviour towards shop owners and their staff. More than a third (35%) have been impacted by at least one traditional crime in the last two years. These crimes are related to vandalism/damage to premises and anti-social behaviour (34%), followed by burglary or robbery (30%) and theft by a third/external party (29%).
As a result, over half (56%) of the victims lost more than £1,000, while a third (33%) faced losses of £1,000 or less. One in ten (11%) lost more than £10,000.
Fraud & Cybercrime Pose Challenges Too
Close to two-fifths (37%) of small businesses have come across fraud, costing 44% of the victims up to £1,000. Some 39% lost more than £1,000 and 8% say it cost more than £10,000.
Invoice fraud (31%) is identified as the most common type of fraud. Card/cheque fraud (29%) comes in second and a quarter (26%) goes to unauthorised payments from bank cards/accounts.
A majority (72%) of small businesses have encountered cybercriminals with phishing (92%) dominating the scene. One in ten have faced malware attacks, while a similar proportion (9%) had their social media accounts hacked.
As with the fraud, 44% of those falling victim to cybercrime lost up to £1,000. A third lost more than £1,000 and 6% say it cost more than £10,000.
The surge in the number of crimes against small businesses is despite six in ten (65%) taking at least one measure to protect themselves against traditional crimes, such as installing or updating security, initiating a training programme, and improved insurance cover. An overwhelming majority (92%) gear up against cybercriminals and fraudsters, ranging from installing anti-virus software to updating software on IT systems regularly.
More than six in ten (66%) small businesses say they have reported their most impactful crime to the police (30%), their bank (20%) and their IT provider/service (18%). The rest chose not to report for a wide range of reasons, such as thinking the crime wasn’t serious enough to report, a lack of confidence in the police/Action Fraud, and no plans to make an insurance claim.
Among a third of small business victims that have reported the crime to the police, six in ten (59%) say officers did not attend the scene. Close to a half (48%) believe the police did not investigate after the initial response. Merely 3% say the police investigated, identified and arrested the perpetrators.
Amid increased reports of organised shoplifting, some businesses say they feel it is wrongly seen as an “acceptable business cost” and are under the impression that there is a threshold of £200 to trigger police investigations.
“There’re massive repeat offenders who are tolerated. It might be fine for the perpetrators but it’s not fine for you if you’re a small operator,” one FSB member based in South East England said.
In light of the findings, FSB has put forward a list of recommendations for traditional crime, including:
Police and Crime Commissioners should include business crime as a priority in their Police and Crime Plans and in manifestos for all those standing for election in May 2024 demonstrating commitments to business crime from the beginning to the end of their term.
Home Office should:
Introduce a separate offence for violence against retail workers.
Clarify that there is no £200 threshold for investigating organised shoplifting offences. There is currently an impression that shoplifters will not be arrested if they steal under £200 worth of goods. Correcting this impression would send a clear message that lower value organised shoplifting offences will not be tolerated.
For cybercrime and fraud the UK Government and National Cyber Security Centre should:
Review the pricing of Cyber Essentials certification as well as costs associated with annual renewal in relation to the smallest businesses and explore whether lower tier pricing or a special reduced rate could be introduced.
Home Office should:
Include the impact of fraud on small businesses in the next fraud strategy and consider a specific targeted approach with clear objectives to tackling it.
Introduce a mandatory recording process for business crime and add a ‘business crime’ section to the crime outcomes in England and Wales statistics so progress can be tracked, and targets set.
Aim to increase the average number of police officers in England and Wales up to 335 per 100,000 population to help dedicate appropriate resources for crime against businesses including cybercrime and fraud.
FSB Policy Chair Tina McKenzie said: “Small businesses are a huge and increasing target for criminals – the new Home Secretary and the Police must act to provide the safety and security on which day-to-day economic life depends."
“We’ve been hearing countless reports of organised shoplifting over the past year, and our study further shows how serious and unprecedented the problem is. This is certainly not what we need at a time when we look to grow our economy and the start-up landscape."
“Witnessing our small high-street shops and independent businesses losing their hard-earned money because these crimes are overlooked by authorities is disheartening, not to mention the mental toll on small business owners and their staff."
“What’s more alarming is the explosive rise in cybercrime and fraud from the persistence of phishing emails to sophisticated invoice fraud. As more and more small businesses extend their operations to the virtual world, online services providers that hold personal and financial information must enhance their security measures."
“Small businesses are actively taking measures to protect themselves. But the extent of crime and the severity of damage to our economy are far beyond what they can control."
“The small business and self-employed community can’t be left to fend for themselves against organised crime. We need to see not only firmer and swifter action from the police and the Government, but also politicians standing for the next General Election to make business crime a priority in their manifesto and show that they place these 5.5 million voters at heart.”