FRAUD in Scotland has fallen by 39% in the first six months of this year compared to the same period last year.

But auditors KPMG found a significant rise in the level of fraud committed by employees on their customers and employers rising from £940,000 in 2014 to more than £3.3m in 2015.

This contrasts with the decline in cases brought to court where a customer has defrauded a business - down

In total, in the first six months of this year, Scottish courts dealt with nine cases of high value fraud, one more than compared to the corresponding period in 2014. The total value of fraud was £3.8m compared to £6.2m in 2014.

Ken Milliken, head of forensic for KPMG in Scotland said: “While the value of fraud across the UK is on the up, the picture in Scotland tells a more positive story.

“Measures in place to protect businesses from external fraud from customers appear to be working with no cases of that type being heard in Scottish courts during the last six months.

"Furthermore, the value of fraud cases in Scotland saw a marked reduction during that period with just one case being heard over the £1m mark.

"However, there must be corresponding checks and balances in place to prevent employees from within busineses exploiting their own customers and employers.

"This is reflected by the cases coming to court in Scotland in 2015 where significant levels of fraud have been committed by staff in truested positions either swindling their customers or embezzling money from the firms they work for."

The main cases recorded in Scotland in 2015 so far include:

• A financial adviser from Glasgow found guilty of stealing nearly £500,000 from an elderly couple via false investment promises.

• An assistant manager from a tax advisory firm embezzled more than £726,000 from trusts which were set up to help charities.

• A senior NHS worker from Ayrshire accused of stealing surgical equipment worth £1.3m over an extended period of time.

Nationally, the most common perpetrators of fraud within the family were people frustrated by the wait to receive their inheritance who took matters into their own hands. By value, 72% of family fraud was committed by fraudsters aged over 45.

Hitesh Patel, UK forensic partner at KPMG, said: “Fraudsters in the family are abusing their intimate knowledge and close connections to steal from partners and parents.

"People are living longer and we are seeing examples of people who are choosing to remove uncertainties about when or if they will get their inheritance by fraudulent means.

"It’s also likely these cases are just the tip of the iceberg – frauds of this nature often go unreported as embarrassed victims seek to ‘keep it in the family’ and ‘forgive and forget’.”

In one such case a woman stole her father’s savings after being granted power of attorney, leaving his care home bills unpaid. In another, a man stole his mother’s £600,000 savings after realising he was not the main recipient in her will.

KPMG notes that Power of Attorney registrations have more than doubled in the last four years, with almost 350,000 registered in the financial year ending April 2015, up from 150,000 in 2011.**

The march of the middle men

KPMG’s Fraud Barometer revealed a substantial rise in supply chain fraud, as criminals pass themselves or their products and services off as genuine. Customers were often unaware that they had been tricked by an imposter or that they had bought counterfeit goods. This type of fraud accounted for £99m in the first two quarters of 2015, an increase of £70m on the same period last year.

In one case the defendants are alleged to have set up fake government websites to dupe people into handing over money for administrative services for which the end consumer did not in fact have to pay. The losses are thought to total £30m.

Hitesh Patel commented: “Criminals are inserting themselves into the supply chain, and unwitting buyers often genuinely do not realise they are dealing with an intermediary when they do not need to, as a result of misrepresentation.

This issue has been aggravated by the sheer volume of transactions conducted online. Criminals are inherently adaptable and have seamlessly moved with the times, adapting the way in which they target victims to take advantage of advances in technology and anonymity afforded by digital commerce.”