One in four consumers report fraud scam losses

A new study by FICO has underscored the need for banks to strike a better balance between customer satisfaction and fraud mitigation as real-time payments (RTP) surge in popularity. In the survey, one in four (26%) per cent of consumers said that they had reported actual or suspected scam losses to their bank.

About three-quarters of consumers in the UK say they have sent (79%) and received (73%) RTP and more than a quarter (28%) plan to increase their RTP usage in the next 12 months. However, RTP-related scams, such as Authorised Push Payment (APP) fraud, are following in the shadows. In addition to the quarter of Brits who say they have reported losses, an alarming 41% of respondents said their friends or family members have been scammed. 70% say they have received a text, email or call that was part of a scam.

Matt Cox, Vice President and General Manager for FICO in EMEA said “The need to stop scams has never been more urgent. In our study, more than half of UK consumers want their banks to deploy better fraud detection systems. And the stakes have been raised by the new rules that came into force last month, from the Payment Systems Regulator and the Bank of England. Both sending and receiving institutions must reimburse APP fraud victims in most cases.”

The research also found that over half of consumers (54%) feel they are responsible if they fall for a scam; only 9% blame the scammer. Add to this the fact that 73% of consumers in the UK think banks should refund scam victims most of the time or always, and the potential reputational and cost fallout from APP fraud is massive.

“Financial institutions should focus on mitigating fraud at the front end. They play a crucial role in identifying and intervening in scam transactions,” Cox said. “It’s vital that consumers remain confident enough to take advantage of the benefits of real-time payments, such as immediate transfers and instant funds availability.”

Cox continued “One of the most fundamental ways banks can help to prevent losses is by knowing how their customers want the bank to communicate with them. The good news is that more UK consumers prefer to receive sensitive communications through their bank’s app than any other method (37%). As banking apps provide a much more secure channel for communications and transactions than text messages or emails, they can be a key channel for banks to help consumers fight scams. But no one channel is right for every customer, and banks should be able to select the most effective channel for each person.”

“By automating fraud detection at scale, banks can really help to defend their customers’ interests, protect their own bottom line and importantly, build greater trust in the all-important customer relationship.”