APP Fraud Continues To Keep Banks Up At Night

April 22, 2022
Back
TSB, one of the UK’s largest challenger banks, has put out an “urgent warning” about impersonation fraud in the UK, stating that it has accounted for one-third of fraud cases since the start of the year, and over a half of total losses (55 percent).

TSB, one of the UK’s largest challenger banks, has put out an “urgent warning” about impersonation fraud in the UK, stating that it has accounted for one-third of fraud cases since the start of the year, and over a half of total losses (55 percent).

The average cost of impersonation fraud comes to almost £4,000 per case across the banking sector, a new report has revealed.

TSB, which was formerly part of Lloyds Banking Group, has now said that it is warning consumers to remain “extra vigilant” of the most impersonated companies, especially considering the negative impact of household cost increases, including a 30-year high of inflation and energy price rises.

“Households are bombarded with scam calls, texts and emails every day, and we're urging them to remain suspicious of any unsolicited contact, to avoid falling victim to fraud at a time when the impact would be hardest felt,” said Paul Davis, fraud prevention director at TSB, in a statement.

In tough times, fraud and financial difficulty go hand in hand, said Phil Andrew, chief executive of StepChange, a UK debt charity. “The pandemic has left many households with little or no ability to cope with financial shocks and, as cost-of-living increases start to bite, it’s vital consumers are protected from those seeking to exploit financial and other vulnerabilities.”

“People who have lost money to fraudsters need quick and effective help and support, so it’s particularly welcome to see refund support offered to victims of fraud,” he said, commenting on TSB’s compensation package.

Davis continued: “We continue to be the only bank to protect customers from fraud losses, through our Fraud Refund Guarantee, which is as important now as it’s ever been to the lives of our customers."

Impersonation fraud, sometimes going by the term Authorised Push Payment (APP) fraud and defined as an attack in which a criminal impersonates a company, business, organisation or an individual as the key component of the scam, accounted for more than half (52 percent) of TSB customer transactions to fraudsters by value in 2021.

New industry figures highlights the extent to which fraud continues to cause a headache for both businesses and consumers, with over £2bn worth of cases reported to Action Fraud in under a year.

What’s more, APP fraud has seen a spike of 300 percent.

TSB’s report follows analysis published last month by consumer lobby group Which?, that revealed a total of £854m was lost across 306,573 cases of authorised push payments (APP) fraud between July 2019 and June 2021.

Only 42 percent of losses were returned to the customer.

It is an issue that has also reached Westminster.

Earlier this year, a cross-party group of UK lawmakers called on the government to extend the powers of the Payment Systems Regulator (PSR) and act faster on fraudsters and scammers.

The report unanimously recommended that “the government urgently legislates to give the PSR powers to make reimbursement mandatory, and that the PSR then take rapid action to protect consumers”.

The lawmakers also pressed for the PSR and HM Treasury to accelerate their consultation processes to enable quicker implementation of measures to protect consumers from fraud.

Amazon prime for fraud

Breaking down impersonation fraud, TSB revealed that Authority Fraud, where criminals pose as official organisations to trick victims into making payment transfers, accounts for 13 percent of all fraud cases. Of these, the police were ranked highest as an authority that was impersonated the most by fraudsters, in 40 percent of cases.

In addition, TSB warned of what it calls Amazon fraud, which has affected one in 20 victims at the bank.

This was made a standalone category due to the scale and variety of the impersonation scams that use Amazon’s name to trick consumers about subscriptions, refunds and account support.

Our premium content is available to users of our services.

To view articles, please Log-in to your account, or sign up today for full access:

Opt in to hear about webinars, events, industry and product news

To find out more about Vixio, contact us today
No items found.
No items found.