Criminals Use Universal Credit System To Defraud Families

Fraudsters are using the universal credit (UC) benefits system to defraud U.K. families, leaving them without any money.

According to The Financial Times, local authority workers blame the fraud on flaws in the online system that is used to apply for the new program, which groups six existing benefits — including housing benefits and disability allowances — into a single payment. It has a cap of £1,666.67 a month for couples and single parents outside London. While supporters say it encourages people to work, many say that it increases poverty, partly because it forces recipients to wait an average of five weeks for their first payment.  The delay is also being exploited by fraudsters.

“If universal credit didn’t have a five-week wait for living money and money for housing costs, then arguably this exploitation window wouldn’t arise,” said a Salford council spokesman.

Criminals posing as Jobcentre workers or advisers are targeting low-income people and tricking them into handing over their personal details by telling them they can help with the application process for the interest-free loans. The fraudsters then apply online for the benefit, and then take most or all of the loan for themselves.

When the victims complain that their money has been stolen, the U.K. Department for Work and Pensions (DWP) launches a fraud inquiry against them and stops all benefits. It also requires them to pay back the “loan” in full from their future payments, which leaves needy families without money to pay for food and rent.

Catherine Connors, a senior welfare advice officer in Salford, said she had three cases of fraud in recent days, with one victim writing: “Hi I was misled and robbed of [sic] someone who got a universal credit loan with my details by falsely telling me it was a survey. I have six kids, one has special educational needs, one is newborn. I reported this but tax credits are not paying me. It’s been four weeks. I am totally penniless . . . I can’t take much more.”

In the meantime, the DWP said it expected UC to reduce its losses by £1 billion when it was fully launched.

“We remain vigilant to all forms of fraud and investigate, and prosecute, where appropriate. We are constantly refining our processes to ensure universal credit remains both accessible and secure, with those who need support getting it,” the DWP said.