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Global Recession Fraud 2022: How Economic Downturns Impact Crime & What to Do About It

The events of the last few years have rattled the world in a way that no one expected. On the back of the pandemic and amid Russia’s invasion of Ukraine and its effects on global markets, the World Bank has slashed its growth forecast to 2.9% for 2022, indicating a recession could be looming.

For millions of professionals across the world, the top priority is to protect their company. Although some impacts of an economic downfall are unpredictable, financial crime is a risk that nobody can afford to ignore.

Let’s take a look at how financial crises affect the fraud and crime landscape, with a focus on digital.

Past and Present: Groundhog Day?

Over ten years ago, following the 2007–2009 recession, the Association of Certified Fraud Examiners released its survey results, concluding that intense financial pressure during the economic crisis led to an increase in fraud.

Since then, the financial world has moved towards digitization. Today many businesses handle correspondence and transactions primarily online, increasing their reach but also increasing their vulnerability to online crime during times of volatility. 

That’s where sophisticated fraud prevention companies like SEON can help, putting to good use this global shift towards the digital to stop fraud and crime without affecting the customer experience, through digital footprint analysis, velocity checks, IP analysis and more.

But the climate in 2021 shows that online fraud is not slowing down. The Internet Crime Complaints Center received over twice as many complaints in 2021 as compared to the last recession in 2009, with total monetary losses exceeding 7.5 times those of 2009. 

Criminals are implementing new strategies, like techniques for account takeover attacks, as well as romance fraud, CEO fraud, and investment scams. And they are operating at a larger scale than ever before.

So, what should we expect in case an economic downturn materializes?

PJ Rohall, Head of Fraud Strategy & Education at SEON, says: 

“It’s important to recognize that multiple factors drive fraud attacks, therefore elements outside a global recession can have an impact. However, given the connection between a rise in online fraud and periods of economic downturn, we wanted to investigate how a recession can impact digital crime in the US and UK.”

It’s time to take a closer look at the statistics and projections.

How Has Recession Impacted Fraud in the US?

Any alteration in the financial dynamics of a country provides opportunities for fraudsters to infiltrate businesses.

During times of economic hardship, many organizations reduce or even cut seemingly non-essential departments, in an effort to save money. 

Small or new businesses with lower budgets feel increased pressure to save costs, which is making them more susceptible to attacks. On the other side of the coin, some larger organizations can underestimate the importance of up-to-date digital security and employee training, resulting in these essential teams downsizing.

Because of this, fraudsters who were previously foiled by security departments with higher budgets are often left with better opportunities to infiltrate vulnerable businesses. The consequences can involve anything from identity theft to account takeovers, data breaches and beyond.

The Effect of a recession on Fraud in the US

At the height of the recession in 2009, the Federal Bureau of Investigations’ Internet Crime Complaints Center received 336,655 complaints of online crime – a 22.3% increase from the previous year. Total monetary losses were reported to be around $559.7 million, over double those of 2008.

In the years following the economic downturn, there was a consistent decline in the number of complaints of online crime. In 2013, that figure was around 262,813. 

From 2014 to 2018 the number of complaints to the Center increased each year, with the total recorded number of complaints in 2018 being 351,938 – around 15,283 more than in 2009, during the recession.

When the most recent recession hit the United States in 2020, following the outbreak of COVID-19, the Bureau of Labor Statistics reported that unemployment reached its highest level, peaking at 14.7% in April.

In the same year, the number of complaints of online crime to the Internet Crime Complaints Center shot up to 791,790 – a 69.4% increase from the 467,361 complaints logged in 2019. The total monetary losses of online crime were reported to be over $4.2 billion in 2020, which is a 20% increase from the $3.5 billion estimated losses the previous year.

With such a close link between online crime and economic hardship, it is more essential than ever to protect your business against fraudsters. Corporate downsizing, for example, and a reduction of staff, including managers, can have detrimental effects on any corporation. 

In such cases, the reduced workforce can be asked to take on tasks that fall outside of their scope of expertise and for which they may not have had risk mitigation training. Meanwhile, security teams can be neglected, with budget reductions providing criminals with increased opportunities. 

How Has Recession Impacted Fraud in the UK?

During a recession, people can be more financially vulnerable, prompting criminals to attack. The 2008 recession saw a 2.1% fall in GDP and a 7.3% increase in fraud offenses in the UK. 

At around the same time, the Office for National Statistics reported that the proportion of CSEW plastic card users who had been a victim of card fraud rose from 4% in 2006–07 up to 6% by 2009.

A report on cybercrime by the Home Office states that there was a decline in internet-enabled card-not-present fraud in the banks/payment card industry, from a peak of £181.7/$219.6 million in 2008 to £135.1/$163.3 million in 2010, when the economy was recovering from the recession. Digital transformation in the following years could have prompted the 2012 rise to £140.2/$169.4 million.

Today, with the rising cost of energy, gas, food and rent, people across the country are pinching their pennies now more than ever. The Bank of England predicts that Consumer Prices Index (CPI) inflation is predicted to peak at 13.3% in October 2022.

Following past recessions, much of the economy has become digitized. Although it provides some security and decreased costs in the form of eliminating red tape and allowing for automated payments, this digital transformation increases the attack surface, no matter if it’s financial fraud, account takeovers or other schemes the fraudsters attempt.

The Effect of a Recession on Fraud in the UK

Statistics indicate that online crime increases during a recession. In 2020, GDP declined by 9.7%, the steepest drop since 1948. According to Action Fraud, the UK’s national reporting center for fraud and cybercrime, the number of fraud reports increased from 27,187 for the 2019–20 fiscal year to 31,322 in 2020–21.

The total amount of losses rose by £4.2/$5.05 million between 2019–20 to 2020–21, from £5.4/$6.5 million to £9.6/$11.5 million.

Meanwhile, the number of disseminations almost doubled, from 7,394 in 2019–20 to 13,655 in 2020–21, when the COVID-19 recession was at its peak.

Indeed, there seems to be a link between online crime and periods of economic hardship. While in some cases this could be the result of criminals searching for vulnerable targets, in other cases budget cuts and stress can lead to employees whistleblowing on workplace fraud.

Action Fraud found that the most common type of online crime for 2020–21 was social media and email hacking, accounting for 51% of all reports. A surge in phishing messages has affected the UK, with fraudsters impersonating a close friend or loved one to trick victims, which is largely a social engineering technique.

How Can Businesses Be Safe from Recession Fraud?

As a business, there are simple steps you can take to safeguard your operations, as well as some more impactful strategies – from better training for staff to updating your risk stack with more sophisticated solutions.

How Can You Protect Your Business Against Fraud

How Can Individuals Be Safe from Recession Fraud?

As an individual, the best way to protect yourself from fraud in a recession is to be well aware of the risks and methods. There are plenty of reputable resources available online on websites as well as YouTube to learn the basics of keeping safe online.

How to Protect Against Fraud for Individuals


We wanted to find out how a recession can impact fraud, and provide advice on how individuals and businesses can protect themselves from fraud.

We sourced the number of complaints of online crime and the total dollar loss of online fraud each year from the Federal Bureau of Investigations’ Internet Crime Complaints Center’s annual reports.

We sourced the civilian unemployment rate in the United States from the Bureau of Labor Statistics, using the unemployment rate for April of each year.

Information on the cycle of fraud during a recession was sourced from PwC’s Fraud in a Downturn.

We sourced information on the GDP and rate of fraud offenses in the UK from the University of Portsmouth, and all information on plastic card fraud was sourced from the Office for National Statistics.

Information on fraud cases in the UK from 2019–20 and 2020–21 was sourced from ActionFraud.

Information on internet-enabled card-not-present fraud was sourced from the UK Home Office.

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Author avatar
Gergo Varga

Gerg? Varga is SEON’s Product Evangelist. With more than 10+ years of experience in the Hungarian and international risk management sphere, he has developed an astute knowledge of RiskOps and Open Source Intelligence. He is the author of SEON’s Fraud Prevention for Dummies guide.

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