Fraudsters stole £1.3bn in 2021

UK Finance’s latest fraud report has shown that a total of over £1.3 billion was stolen by criminals through authorised and unauthorised fraud in 2021.

The banking and finance industry prevented a further £1.4 billion of unauthorised fraud from getting into the hands of criminals.

Unauthorised financial fraud losses across payment cards, remote banking and cheques totalled £730.4 million in 2021, a decrease of seven per cent compared to 2020. Victims of unauthorised payment card fraud are legally protected against losses. Industry analysis shows customers are refunded in excess of  98 per cent of all confirmed cases.

There were 195,996 incidents of Authorised push payment (APP) fraud scams in 2021 with gross losses of £583.2 million. £214.8 million was lost to impersonation scams, whereby criminals impersonate a range of organisations to trick people into giving away their personal and financial information. This was the largest category of APP losses.

£171.7 million was lost to investment scams, the second largest category of APP losses. Whilst 99,733 cases of purchase scams, which means this was the most common type of scam – accounting for 51 per cent of all cases – although total losses were £64.1 million.

A total of £271.2 million of losses were returned to victims of APP scams, accounting for 47 per cent of losses.

UK Finance also collects data on cases assessed under the APP voluntary code. As a subset of the total amount refunded above, £238.1 million of losses were returned to victims under the APP code, accounting for 51 per cent of losses in these cases.

Katy Worobec, Managing Director of Economic Crime at UK Finance, said “Unauthorised fraud losses fell last year, but this type of criminal activity remains a major problem. Through the introduction of new measures such as strong customer authentication, coupled with continued investment in technology, the banking and finance industry prevents significant amounts of fraud from taking place.”

“Authorised fraud losses rose again this year as criminals targeted people through a variety of sophisticated scams, with much of the criminal activity taking place outside the banking sector, often involving online and technology platforms. This is why we continue to call for other sectors to play a greater role in helping protect customers from the scourge of fraud.”

Emma Lovell, Chief Executive at Lending Standards Board (LSB) said “UK Finance has released its Annual Fraud Report, reinforcing that we must not accept APP scams as an endemic part of life. We must move resolutely away from the cure-over-prevention focus that dominates the landscape at present. The key question all sectors and industries should be asking is: How can we stop APP scams occurring in the first place?”

“No-one should be out of pocket because of criminal activity. Evidence shows scams impact victims’ mental health, leaving long-lasting feelings of guilt and shame. Reimbursement alone cannot reverse this damage; nor does it reverse the fact that the proceeds of scams often fund organised and other serious crime. Relying solely on reimbursement diverts focus from preventing harm and stopping scams in their tracks.”

“The voluntary Contingent Reimbursement Model Code (CRM Code) is the only set of protections that require signatory payment service providers to detect APP scams, prevent them from happening and respond to them when they are successful. Evidence shows the CRM Code’s introduction, and its prevention focus, has stalled an exponential rise in APP scams. That said, we must not rest on our laurels and payment service providers should not be treated as the only line of defence against these criminals.”

“Often by the point of payment it is too late. Social engineering has convinced the victim that the payment is legitimate. The earlier prevention steps are taken, the greater the chance of protecting the customer. Other sectors involved in the scam journey – including utilities, telecommunications, and social media – must step up to the plate, identify how they can intervene and act on this immediately.”

“Meanwhile, firms that are eligible to sign up to the CRM Code must work towards this as a matter of urgency.”

Martin Cheek, Managing Director at SmartSearch, said “We support Finance UK’s call for cross-sector action to tackle online scammers. Behind these miserable crimes, which often exploit the most vulnerable, are criminals who have been able to able to hide their identities and move stolen money.”

“As scammers use ever-more sophisticated ways to steal and launder cash, these findings are yet another indication that robust electronic verification checks are the quickest and most effective way for the organisations these criminals exploit to manage their risks and – most importantly – to protect their customers.”