Fraud ‘should be considered a national security threat’

UK Finance has released its latest fraud report covering the first half of 2022. This report shows that while the end of the pandemic has seen a fall in overall fraud losses, some fraud types have increased as criminals continue to adapt their methods. The organisation noted that the drop was partially due to H1 21 being an exceptionally high period for fraud, rather than the start of a downward trend.

A total of over £609.8 million was stolen through fraud and scams in the first half of 2022, a decline of 13 per cent compared to H1 2021. Of this total, unauthorised fraud loses were £360.8 million and authorised push payment (APP) fraud losses were £249.1 million. The banking and finance industry prevented a further £583.9 million of unauthorised fraud from getting 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 to tackle the problem at source and will continue working with the government on upcoming legislation in this area.

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 the threat as we know criminals continue to find new ways to exploit potential victims. However, criminal gangs simply bypass the advanced security measures banks have in place and instead directly target the customer, usually outside the confines of the banking system. This is why it is 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 to do business.”

H1 2022 fraud losses

Unauthorised fraud: here the account holder themselves does not 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, a decrease of nine per cent compared to H1 2021.
  • Victims of unauthorised payment card fraud are legally protected against losses. Industry analysis shows customers are refunded in excess of 98 per cent of all confirmed cases.

Authorised push payment (APP) fraud: here the customer is tricked into authorising a payment to an account controlled by a criminal.

In H1 2022, APP 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 emails, as well as fake websites and social media posts, to trick people into handing over personal details and passwords. They subsequently used this information to convince people into authorising a payment.

There were 95,219 incidents of APP scams in H1 2022 with gross losses of £249.1 million, down 17 per cent 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 APP losses.
  • £61.2 million lost to investment scams, the second largest category of APP losses.53,782 cases of purchase scams, which means this was the most common type of scam – accounting for 56 per cent of all cases

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

Staying safe

UK Finance urges customers to follow the advice of the Take Five to Stop Fraud campaign, and remember that criminals are experts at impersonating people, organisations and the police. They spend hours researching you for their scams, hoping you’ll let your guard down for just a moment. Stop and think. It could protect you and your money.

  • Stop: Taking a moment to stop and think before parting with your money or information
    could keep you safe.
  • Challenge: Could it be fake? It’s ok to reject, refuse or ignore any requests. Only criminals
    will try to rush or panic you.
  • Protect: Contact your bank immediately if you think you’ve fallen for a scam and report it to Action Fraud