UK Finance’s half-year report found that UK consumers fell victim to a scam every 12 seconds from January to June this year.
Authorised push payment (APP) fraud cases, where victims are conned into making online transfers were up 22 per cent to £240m compared with the same period last year. The majority of APP fraud started online and another 17 per cent started by phone.
But UK Finance said banks prevented a further £651m of unauthorised fraud from being stolen through advanced security systems.
Socially engineered fraud
UK Finance said that criminals commit investment scams advertised on search engines and social media, romance scams via online dating platforms and purchase scams promoted through social media and auction websites.
Criminals also use scam phone calls, text messages and emails to trick people into handing over personal details and passwords, using this information to convince people into authorising a payment.
Typically, scammers first focus their attempts on socially engineering personal information from their victims with a view to committing APP fraud in which the victim makes the payment themselves. If this is not successful, the criminal often has enough personal information to enable them instead to impersonate their victims, with a view to either taking control of their existing accounts or applying for credit cards in their name.
Unauthorised fraud losses
Losses due to unauthorised transactions across payment cards, remote banking and cheques were £340.7m in the first half of 2023, down three per cent on the same period in 2022. The total number of recorded cases was 1.26m, down 10 per cent.
Victims of unauthorised fraud cases, such as these, are legally protected against losses. UK Finance said that customers are fully refunded in more than 98 per cent of unauthorised fraud cases.
Remote purchase, or card not present fraud, remained the biggest single category of losses in this category, although there was a 12 per cent reduction to £173.8m and a 14 per cent reduction in case numbers. The level of losses was the lowest total reported for eight years, with improvements driven by measures such as strong customer authentication and one-time passcodes.
There was a notable increase in card ID theft losses, which were up 57 per cent to £33.1m. UK Finance explained that where criminals are unable to socially engineer their victims into making authorised push payments, they use the personal information gathered as well as stolen card details to either take over existing accounts or apply for new credit cards.
APP fraud losses
The total number of APP cases was up 22 per cent to 116,324. The main driver behind this is purchase scams, where people are tricked into paying for goods that never materialise.
But despite the increase in the number of cases, APP fraud losses were £239.3m, down one per cent compared to last year. This comprised £196.7m of personal losses and £42.6m of business losses.
The number of romance scams, where victims are tricked into believing they are in a relationship, rose by 29 per cent and the amount lost to this kind of fraud rose by 26 per cent to £18.5m.
Fraud levels ‘worryingly high’
Emma Lovell, CEO of the Lending Standards Board, said: “These figures show that fraud levels remain worryingly high, indicating fraudsters still pose a significant threat to society and are becoming more sophisticated by the day. With criminals increasingly leaning on social media and online platforms to drain victims’ bank accounts, all sectors must double down on efforts to protect customers.
“As well as the financial repercussions, scam victims often suffer devastating emotional distress – feelings that cannot be expunged through reimbursement. While reimbursement is part of the picture, we mustn’t lose focus on the preventative measures that avoid the negative impact on customers – while halting the funding of these criminal enterprises.”
Rocio Concha, Which? director of policy and advocacy, said: “The increase in APP scams is largely driven by purchase scams, so it’s very worrying that the regulator is considering proposals that could mean victims losing up to £250 would not be eligible for reimbursement. This risks opening the floodgates to this type of fraud if banks have less of an incentive to prevent it and victims less of an incentive to report it to the police.
“With most fraud now starting online, new online safety laws must lead to Ofcom holding tech giants to a high standard, ensuring that fraudulent content doesn’t appear on their sites in the first place and taking tough enforcement action against companies that fail to meet those standards.”