30% fraud losses labelled a ‘national security threat’

23rd September 2021

More than £4 million on average was stolen by fraudsters every day in the UK during the first half of the year as losses skyrocketed during the pandemic according to new UK Finance figures.

The figures show that fraud committed when individuals are tricked into handing over money and personal details surged by 71% compared with the first six months of last year. Less than half of the money lost in these cases was refunded by banks.

In total, £754 million was stolen through fraud in the first half of the year, an increase of 30% compared with the same period last year. Within this total, so-called authorised push payment (APP) fraud – when victims think they are paying a genuine organisation – rose by 71% to £355 million

The analysis showed that Iin previous years the largest fraud losses have been unauthorised frauds mainly committed using payment cards. This year, however, criminals focused their activity on what is termed authorised push payment (APP) fraud. In APP fraud a customer is tricked into authorising a payment to an account controlled by a criminal. In these scams the criminal’s activity takes place outside the banking system.

Using tactics such as scam phone calls, text messages and emails, as well as fake websites and social media posts, criminals seek to trick people into handing over personal details and passwords. This information is then used to target victims and convince them to authorise payments.

As a result, we saw a 71 per cent increase in APP fraud during the first half of 2021 and, for the first time, the amount of money stolen through APP fraud overtook card fraud losses.

The analysis also saw changes in how criminals moved stolen money. They targeted people as young as 14 via social media platforms to become money mules, where their bank account is used to launder stolen money. Intelligence shows a notable increase in the use of cryptocurrency wallets being used to take stolen money outside of the banking system quickly.

Fraud is now at a level where it poses a national security threat – as such, the banking and finance industry is calling for government-coordinated action across all sectors to tackle the issue, including ensuring that all economic crime is brought within the scope of the Online Safety Bill.

In total £753.9 million was stolen through fraud, an increase of 30 per cent compared to the same period last year. An overview of the loss figures is included here, with more detailed information in the tables below.

Unauthorised fraud losses were £398.6 million, an increase of 7 per cent. The banking and finance industry prevented a further £736 million of attempted unauthorised fraud which means that £6.49 in every £10 of attempted unauthorised fraud was blocked.

Authorised push payment (APP) fraud losses were £355.3 million, an increase of 71 per cent, including:

  • Impersonation scams: as previously announced, losses were £129.3 million (up 123 per cent) as criminals posed as delivery companies, the NHS and government departments by sending out scam texts and emails.
  • Investment scams: losses were £107.7 million (up 95%) as people were often enticed by adverts on social media offering high returns on investments.
  • Romance scams: losses were £15.1 million (up 62%), linked to the rise in online dating during the pandemic.
  • Purchase scams: with online retail growing, purchase scams were the most common form of authorised push payment (APP) fraud, accounting for almost half of all APP cases.

Katy Worobec, Managing Director of Economic Crime at UK Finance, said “Our latest figures show the sheer scale of fraud taking place in the UK and highlight clearly the need for coordinated action to address this threat. The banking and finance industry invests billions in advanced systems to try and stop fraud happening in the first place, but criminals are exploiting weaknesses outside of banks’ control to trick customers into making payments directly to them.”

“This is why we are calling for coordinated action and increased efforts from government and other sectors to tackle what is now a national security threat.We recently announced that major technology companies are donating $1m of advertising to raise awareness of the Take Five to Stop Fraud campaign on their platforms which is an important step in helping to raise awareness among consumers of the threat.”

“Criminals continue to target customers with a variety of scams, often via online platforms, and it is only through coordinated action that we will be able to really make progress in addressing the problem.”

Unauthorised-fraud-table

 

 

Commenting on the figures, Emma Lovell, CEO at the Lending Standards Board said “Authorised Push Payment (APP) scams are becoming increasingly complex, convincing, and widespread. And with ever more customers sending and receiving payments online, UK Finance’s statistics show that growing numbers are falling victim to APP fraud. However, overall reimbursement levels for cases under the CRM Code – a voluntary Code governed by the Lending Standards Board (LSB) that sets out consumer protection standards for financial service providers to detect, prevent and respond to APP scams – have gone up to 49%. We also know from the LSB’s oversight work that, when applied correctly, the Code is working and has been successful in addressing what was previously a gap in protections for customers from APP scams before the Code was launched.”

“Reimbursement, whilst vital to reversing the financial distress caused by APP scams, cannot reverse the emotional distress that these scams cause, with the victim’s experience so often associated with feelings of guilt, shame, worry, and embarrassment. It is therefore vital that we stop customers from having to go through this emotional and financial distress by preventing more APP scams from happening in the first place. That is why the Code’s prevention and detection measures are so important.”

“This is not to understate the importance of reimbursement and the appropriate aftercare. Both are crucial steps to ensuring victims are, and continue to be, protected against APP fraud, no matter how large or small the amount lost as a result of the scam. A collaborative effort across the industry is essential for ensuring that prevention, detection, and awareness measures are given equal priority by banks, non-traditional lenders, PSPs, stakeholders and customers alike, to ensure that the customer is protected at every possible stage of the payment journey.”

Sarah Coles, personal finance analyst, Hargreaves Lansdown. said “We’re being bombarded by increasingly sophisticated scams. As banks have got super-smart about fraud, criminals know that customers are now the weakest link in the chain, so they’re focusing all their attention on tricking us into parting with our money. They prey on our fear of being ripped off, trust in the police and banks, and our natural instinct to believe someone who sounds convincing.”

“So-called ‘push-payment’ scams often start with fraudsters getting in touch out of the blue, either through email, a phone call or a text message. They use a variety of techniques to persuade us to transfer money to them. It sounds like the sort of thing we wouldn’t fall for, and when you put it like this, our research shows that only 6% of people don’t recognise that this could be a scam. However, these criminals use incredibly convincing and sophisticated approaches, so we all need to be aware of the risk.”

“The biggest rise in this kind of fraud is impersonation scams, when they often call claiming to be from your bank or from the police. Cases of this kind are up 129% from a year earlier. They might tell you that you have been a victim of attempted fraud. In order to protect yourself, they say you need to move your money into a new account, which turns out to be the fraudster’s account, and your money is gone.”