UK Finance calls for urgent action on fraud prevention

The organisation notes that the drop was partially due to H1 21 being an “exceptionally high period” for fraud, rather than the start of any downward trend. In fact, the banking and finance industry prevented a further £583.9 million of unauthorised fraud from falling into the hands of criminals.

Given that much of the fraud is initiated from criminal activity taking place through online and technology platforms, UK Finance and its members have long been calling for greater cross-sector action designed to tackle the problem at source and will continue working with the Government on upcoming legislation in this area.

H1 2022 fraud losses

Unauthorised fraud is where the account holder doesn’t provide authorisation and the transaction is carried out by a criminal (for example, the victim’s card details are used without their knowledge or consent). Unauthorised financial fraud losses across payment cards, remote banking and cheques totalled £360.8 million in H1 2022, which is a decrease of 9% when compared to H1 2021. 

Victims of unauthorised payment card fraud are legally protected against losses. Indeed, an industry analysis shows that customers are refunded in excess of 98% of all confirmed cases.

Authorised push payment fraud occurs when the customer is tricked into authorising a payment to an account controlled by a criminal. In H1 2022, such fraud losses continued to be driven by the abuse of online platforms used by criminals to scam their victims. These include investment scams advertised on search engines and social media, romance scams committed via online dating platforms and purchase scams promoted through auction websites.

Criminals used scam phone calls, text messages and e-mails, as well as fake websites and social media posts, in order to trick individuals into handing over their personal details and passwords. They subsequently used this information to convince people to authorise payments.  

There were 95,219 incidents of authorised push payment scams in H1 2022 with gross losses of £249.1 million. That’s down 17% compared to H1 2021.

This total includes: 

*£90.5 million lost to impersonation scams (impersonation: police/bank staff and impersonation: other), whereby criminals impersonate a range of organisations to trick people into giving away their personal and financial information. This was the largest category of authorised push payment losses 

*£61.2 million lost to investment scams, which is the second largest category of authorised push payment losses

*53,782 cases of purchase scams, which means this was the most common type of scam (accounting for 56% of all cases)

While the overall levels of authorised push payment fraud have decreased, the amount returned to the customer has increased, rising by 11% to attain a total of £140.1 million in the first half of 2022.   UK Finance also collects data on cases assessed under the authorised push payment voluntary code. As a subset of the total amount refunded above, £117.2 million of losses were returned to victims under the code, accounting for 60% of losses in these cases.

National security threat

Katy Worobec, managing director of Economic Crime at UK Finance, said: “As we have warned previously, the level of fraud in the UK is such that it must be considered a national security threat. The industry is continuously focused on tackling that threat as we know criminals continue to find new ways in which to exploit potential victims.”

Worobec continued: “Criminal gangs are simply bypassing the advanced security measures banks have in place and, instead, are directly targeting the customer, usually outside the confines of the banking system. This is why it’s key that other sectors work with us to fight fraud as it remains a persistent threat to businesses, consumers and the growth of the economy, not to mention the reputation of the UK as a place in which to do business.

Colum Lyons, CEO and founder of ID-Pal, observed: “When it comes to fraud, financial service providers need to adopt the mindset of ‘not if, but when’. The figures issued by UK Finance confirm this assertion.”

Lyons added: “The reduction in instances of fraud on the same period last year is positive to see. Solutions to simplify fraud prevention such that businesses of any size can benefit from them have led to the increasing adoption of anti-fraud technology across more industries. Fraud is an ever-present threat to both organisations and individuals and action needs to be taken to protect both from this risk. Identifying fraudsters before they can cause harm is central to this and having robust digital processes in place that can prevent fraud at source is key.”