The research from trade association UK Finance shows £358m was lost to unauthorised fraud. Most of these victims get their money back.
But £145.4m was lost to authorised push payment (APP) scams, where the account holder is duped into authorising a payment to be made to another account.
Under current legislation, these victims struggle to get a refund because they authorised the payment.
UK Finance has been working with consumer groups and the Payment Systems Regulator on establishing an industry code which clearly establishes the circumstances in which APP scam victims will be reimbursed by their provider.
The Payment Systems Regulator said: “Today’s data shows the need for consumers to be better protected from APP fraud, where a fraudster tricks you into sending them money.
“We want to make it harder for criminals to commit this type of crime – and if they do occur, we want to reduce the impact on the victim.”
The data reveals that purchase scams were the most common APP scam in the first six months of 2018, accounting for almost two thirds of reported APP cases.
In these scams, victims pay in advance for a product or service, such as a car, electronics or a holiday rental, which is never received or does not exist. They often take place online, through auction websites or social media.
Worryingly, criminals are using social engineering, where they groom and manipulate people into divulging personal or financial details or transferring money, to scam victims.
Often fraudsters contact their victim by phone, text message, email or social media pretending to be a genuine person or organisation, such as a bank, the police, a utility company or a government department.
The criminal then either tricks the individual into revealing personal or financial information, which is used to facilitate unauthorised fraud, or persuades their victim to authorise a payment to them.
Katy Worobec, managing director of economic crime at UK Finance, said: “Fraud and scams pose a major threat to our country. The criminals behind it target their victims indiscriminately and the proceeds go on to fund terrorism, people smuggling and drug trafficking, whether or not the individual is refunded.
“Every part of society must help to stamp out this menace, especially by stopping the data breaches which increasingly are fuelling fraud.”
Gareth Shaw of Which? Money said: “Banks’ efforts to date have been woefully insufficient and they have not done enough to protect their customers, who continue to lose life-changing sums of money to ever-more sophisticated crooks.
“It’s about time that banks step up and properly compensate customers who have lost money through no fault of their own.”
Some of the most common types of fraud:
The victim pays in advance for goods or services that are never received. These scams usually involve the use of an online platform such as an auction website or social media. Common scams include the apparent sale of a car or a technology product, such as a phone or computer, advertised at a low price to attract buyers.
A criminal convinces their victim to pay a fee which, they claim, would result in the release of a much larger payment or high value goods, however no such payment exists. These scams include the criminal claiming that the victim has won an overseas lottery or that gold or jewellery is being held at customs and a fee must be paid to release the funds or goods.
A criminal convinces their victim to move their money to a fictitious fund or to pay for a fake investment. The criminal usually offers high returns to entice their victim.
The victim is convinced to make a payment to a person they have met, often online through social media or dating websites, and with whom they believe they are in a relationship. The ‘relationship’ is often developed over a long period and the individual is convinced to make multiple, generally smaller, payments to the criminal.
How to protect yourself:
To stay safe, consumers are urged to follow the advice:
– A genuine bank or organisation will never contact you out of the blue to ask for your PIN, full password or to move money to another account. Only give out your personal or financial details to use a service that you have given your consent to, that you trust and that you are expecting to be contacted by.
– Don’t be tricked into giving a fraudster access to your personal or financial details. Never automatically click on a link in an unexpected email or text.
– Always question uninvited approaches in case it’s a scam. Instead, contact the company directly using a known email or phone number.
Tony Blake, head of fraud prevention at Dedicated Card and Payment Crime Unit, said: “If you get a call, text, email or social media message asking for your personal or financial details or to transfer money, it could be a scam so stop, think and Take Five. Check every request is genuine by doing some research and contact the organisation using the details from their official website, a latest bill or statement.”