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Lower fraud figures are not a reason to be cheerful, UK Finance has said, as it releases its latest statistics.
The UK’s difficulties dealing with high rates of fraud have been a common theme for the payments industry over recent years.
Although data from the first half of a year shows a decline in the total number of payment fraud cases, the trade association has warned that this is not a reason to get carried away.
Rather, the organisation noted that the drop was partially due to H1 2021 being an exceptionally high period for fraud than the start of a downward trend.
Still, more than £609.8m was stolen by criminals through authorised and unauthorised fraud in H1 2022, which is down by 13 percent compared with the same period in 2021.
On the plus side, the banking and finance industry prevented a further £583.9m of unauthorised fraud from getting into the hands of criminals, UK Finance pointed out.
“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,” said Katy Worobec, director of economic crime at UK Finance.
Worobec continued that criminal gangs are simply bypassing the advanced security measures that 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,” she said.
UK Finance data reveals that unauthorised financial fraud losses across payment cards, remote banking and cheques totalled £360.8m in H1 2022, which is a decrease of 9 percent compared with H1 2021.
Meanwhile, there were 95,219 incidents of authorised push payment (APP) scams in H1 2022 with gross losses of £249.1m, down 17 percent compared with H1 2021.
Although there was an overall APP fraud decrease, the amount returned to customers has increased, rising by 11 percent to £140.1m in the first half of 2022, or 56 percent of total APP fraud.
Of total APP fraud, £90.5m was lost to impersonation scams whereby criminals impersonate a range of organisations such as banking staff and police to trick people into giving away their personal and financial information. This was the largest category of APP losses.
Meanwhile, the most common category of scam was purchase scams, with 53,782 cases.
Help on the way
Changes are coming, however, which could further bring down these worrying statistics.
Strong customer authentication (SCA) is now fully implemented, having been introduced in March 2022, helping protect against unauthorised fraud.
In addition, the government has affirmed its commitment to increase consumer protections for fraud in the overhauled Financial Services and Markets Bill.
Earlier this week, the UK's Payment Systems Regulator (PSR) directed around 400 payment service providers (PSPs) to implement confirmation of payee (CoP) to their customers.
The implementation will take place in two phases. A group of 32 payment firms will need to implement the name-checking service, both for the payer and the payee, by October 31, 2023.
This group includes fintechs such as Revolut, as well as large banks such as Citibank, Bank of America and Deutsche Bank.
According to the agency, this will increase the current CoP coverage of 92 percent of Faster Payments transactions to 99 percent.
