The finance industry prevented £820 million of unauthorised fraud in the first half of 2019, up 14 per cent on the previous year, according to the latest figures from UK Finance. This is equivalent to £2 in every £3 of attempted unauthorised fraud being stopped, or £4.5 million of fraud being prevented a day.
Over the same period, £408 million was stolen by criminals through unauthorised card, remote banking and cheque fraud. In addition, £208 million was lost to authorised push payment (APP) fraud, where customers are tricked into authorising a payment to an account controlled by a criminal. The compromise of personal and financial data remains a significant driver behind fraud losses. Customer details are being stolen through data breaches at third parties outside the financial sector, while sophisticated “digital skimming” attacks are being used to steal card data when consumers are shopping online. Criminals also continue to use social engineering techniques to trick customers into divulging their personal information or transferring money.
Katy Worobec, Managing Director of Economic Crime at UK Finance, said: ‘Not only does fraud have a devastating impact on victims, the money stolen goes on to line the pockets of organised criminal gangs involved in drugs, arms and human trafficking. The finance industry is constantly investing in advanced security systems to protect customers from this threat, while helping law enforcement to apprehend and disrupt the criminals responsible.
‘A new voluntary code was introduced in May that has significantly improved consumer protections from authorised push payment fraud, with signatory firms committed to reimbursing victims providing they have met certain standards.
‘However, criminals are continuing to exploit vulnerabilities outside the financial sector to obtain customers’ data that is then used to commit fraud. We all have a responsibility to work together, including online retailers and social media companies, to beat the fraudsters and keep customers’ data secure.’
The data published by UK Finance covers both unauthorised and authorised fraud. But what are these?
In an unauthorised fraudulent transaction, the account holder themselves does not provide authorisation for the payment to proceed and the transaction is carried out by a third-party. Customers are legally protected against losses caused by unauthorised fraud. Industry research indicates that customers are fully refunded in over 98 per cent of unauthorised fraud cases. Total losses due to unauthorised fraud across payment cards, remote banking and cheques in the first half of 2019 were £408 million. This is an increase of two per cent compared to the first half of 2018, but a fall of £36 million compared to the second half of 2018.
Authorised push payment fraud
Authorised push payment (APP) fraud occurs when a customer is duped into authorising a payment to another account which is controlled by a criminal.
The APP fraud data for the first half of 2019 shows a total of £208 million was lost to APP fraud, split between personal (£147 million) and business (£61 million) accounts but financial providers were able to return a total of £39.3 million of the losses to victims, split between personal (£25.6 million) and business (£13.6 million) accounts.
Investment scams accounted for the largest proportion of losses amongst personal customers, with £41 million lost to this type of fraud, or over £12,200 per case. Purchase scams remained the most prevalent form of APP fraud, accounting for almost two in three (65 per cent) of all cases targeting personal customers.
UK Finance is urging 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. Your bank or police will never contact you out of the blue to ask for your PIN, full password or to move money to another account. Their advice is:
- 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.