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 this week, 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.

With next year’s Police and Crime Commissioner elections on the horizon, FSB is urging those looking to stand as a candidate in Wales to recognise this alarming issue and ensure they place business crime front and centre of their manifestos.

The report finds close to two-fifths (37%) of small businesses have encountered 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”.

In light of the findings, FSB has put forward a list of recommendations for traditional crime, including:

Police and Crime Commissioners and candidates 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.

For cybercrime and fraud

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.

On policing, FSB is calling on the Home Office to

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.

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.

“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 also alarming is the explosive rise in cybercrime and fraud from the persistence of phishing emails to sophisticated invoice fraud.

“We need to see not only firmer and swifter action from the police and Government, but also politicians standing in the General Election to make business crime a priority as they seek the votes of the UK’s 5.5 million small business owners.”

Ben Francis, FSB Wales Policy Chair, said: “Sadly, so many small firms across Wales will have found themselves the target of business crime, whether it be as a victim of fraud or cybercrime, or offences like theft, or even anti-social behaviour.

“Crime against small businesses not only has a detrimental impact on those who run and work for them, but also hurts the wider economy. Next year’s PCC election is a good opportunity for candidates to show they have the backs of small firms in Wales by pledging to put business crime central to their manifestos.

“In order to create flourishing high streets and town centres, we need small business owners to feel safe and listened to.”