UK consumers lost a record £479 million last year to scammers according to new figures from UK Finance.

The report showed that criminals turned to online and technology-enabled scams to exploit people’s fears about the Covid-19 pandemic.

Impersonation scam cases, in which criminals impersonate trusted organisations to trick victims into handing over their money, almost doubled to 39,364  cases in 2020, the largest increase of all scam types. During the pandemic, criminals sent fraudulent emails claiming to offer government support to those impacted by the pandemic and scam text messages requesting payments to book a Covid-19 vaccine. They also impersonated delivery companies to exploit the rise in online shopping.

There was a 32 per cent increase in investment scam cases last year, which are often promoted through adverts on search engines offering higher than average returns, and a 38 per cent increase in cases of romance scams, driven by the rise in online dating during the pandemic.

To capitalise on the increase in online activity during the pandemic, UK Finance has also seen the emergence of criminals openly advertising fraud and scam services for sale online, including template phishing websites and custom-built scam apps that replicate real banking apps.

Authorised Push Payment (APP) fraud cases, where customers are tricked into authorising a payment to another account controlled by a criminal, increased by 22 per cent to almost 150,000 in 2020. Losses amounted to a total of £479 million, up five per cent on the previous year.

  • Investment scams, in which a criminal convinces their victim to move their money to a fictitious fund or to pay for a fake investment, saw the highest increase in losses of any APP scam type, totalling £135.1 million.
  • Purchase scams, in which the victim pays in advance for goods or services that are never received, remained the most common form of APP fraud, accounting for 52 per cent of APP fraud cases.

In an unauthorised fraudulent transaction, the account holder themselves does not give permission for the payment and the transaction is carried out by the criminal. Unauthorised fraud losses fell by five per cent to £783.8 million in 2020. The banking and finance industry prevented £1.6 billion of attempted unauthorised fraud and continue to invest in advanced security systems to detect and prevent fraudulent activity. This means that £6.73 in every £10 of attempted unauthorised fraud was blocked by the industry last year.

Lockdown restrictions have caused criminals to turn away from more traditional forms of fraud.

  • Contactless card fraud losses fell by 22 per cent to £16 million, the first annual fall since this data started being collected in 2013. This is likely to be related to lockdown restrictions limiting opportunities for criminals to commit contactless fraud using lost and stolen cards.
  • Cheque fraud losses saw a significant fall of 77 per cent to £12.3 million, likely driven by the continued fall in the use of cheques, which has been exacerbated by the impact of lockdown

UK Finance is calling for fraud to be included in the scope of the government’s Online Safety Bill to better protect consumers from these scams. This would ensure that online platforms such as social media firms, search engines and dating websites take action to address vulnerabilities in their systems that are being exploited by criminals to commit fraud.

Katy Worobec, Managing Director of Economic Crime at UK Finance, said “The banking industry has worked hard throughout the pandemic to protect customers from fraud and to go after the criminals behind it, with over £1.6 billion of fraud stopped in 2020.”

“However, we are seeing a worrying rise in online and technology-enabled scams that evade banks’ advanced security systems and use digital platforms to target victims directly, tricking them into giving away their money or information.”

“We urge the government to use the upcoming Online Safety Bill to ensure online platforms take action to protect customers by taking down scam adverts on search engines, removing fake profiles on online dating websites and tackling fraudulent content on social media.”

“It cannot be right that online firms are effectively profiting from fraud, while society as a whole pays the price.”

Gareth Shaw, Head of Money at Which?, said “A staggering amount of money has been lost to a growing number of scams since the start of the pandemic. The government now has the perfect opportunity to force online platforms to do more to protect their users from fraudulent content through its proposed Online Safety Bill.”

“Meanwhile, banks are failing to consistently follow the voluntary code that was put in place to protect customers from bank transfer scams. The majority of victims are refused reimbursement, with some banks all too often unfairly pinning the blame for these sophisticated scams solely on their customers. It’s time for these protections to be made mandatory and for prevention and reimbursement rates to be published on a firm by firm basis.”