Fraud victims reclaim money from banks as scams increase

19th March 2020

Fraud victims were able to reclaim £41.3 million from banks in the second half of last year, even as bank transfer and impersonation scams were up 29% in 2019 to £455.8 million. This followed the introduction of a new code in May last year which was intended to provide greater protection from fraud for account holders and to ease the process of getting their money back where they are not at fault.

The banking and finance industry prevented over £1.8 billion of fraud in 2019, up nine per cent on the previous year, the latest UK Finance Fraud the Facts report has revealed.

£824.8 million was stolen by criminals through unauthorised card, remote banking and cheque fraud during the same period, a fall of two per cent compared to the previous year. In addition, £456 million was lost to authorised push payment (APP) scams in 2019, where customers are tricked into authorising a payment to an account controlled by a criminal, up from £354 million the previous year.

UK Finance has also published separate figures for the first time on compensation for customers under the voluntary Code on APP fraud introduced on 28 May 2019. This data shows that customers have so far received £41 million in compensation in cases assessed under the Code since it was introduced, accounting for 41 per cent of the total losses in these cases. Compensation rates were higher for fraud cases involving losses of £10,000 or more, and for impersonation scams in which criminals imitate the police, banks or other organisations.

Katy Worobec, Managing Director of Economic Crime at UK Finance, said “The banking and finance industry is taking action on all fronts to protect its customers from fraud and crack down on the criminal gangs responsible. The introduction of the voluntary Code last May has meant more victims of authorised push payment fraud are receiving compensation, particularly in cases involving higher value losses and more sophisticated scams.”

“However, criminal gangs are continuing to exploit online platforms to target customers directly and trick them into handing over their money or information. This shows why fraud and other economic crime should be included within the new regulatory framework for online harms, to ensure all sectors play their part in tackling the threat posed by fraud to our society. Only by working in partnership with the public sector and other industries can we protect innocent victims and prevent money getting into the hands of criminals.”

Gareth Shaw, Head of Money at Which?, said “While it’s encouraging to see more fraud victims being reimbursed as a result of some banks applying the voluntary scams code, these figures suggest that many innocent people who have lost money through this type of crime are still not getting the protection they deserve.”

“The code clearly pledges to reimburse all blameless victims of fraud, so it’s vital that all banks signed up to it are consistent and fair to customers. The huge rise in money being lost shows much more must be done to stop ruthless fraudsters. This includes the whole industry signing up to the scams code, and applying its principles to refund all innocent victims, as well as all banks committing to basic name-check security.”

APP fraud data for 2019 shows:

  • A total of £455.8 million was lost to APP fraud, split between personal (£317.1 million) and business (£138.7 million) accounts.
  • In total there were 122,437 APP fraud cases, split between personal (114,731) and non-personal (7,706 cases) accounts.
  • Financial providers were able to return a total of £116 million of the losses to victims, split between personal (£82.2 million) and business (£33.8 million) accounts.