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More than £1.3bn was stolen by criminals through authorised and unauthorised fraud in 2021, according to UK Finance’s latest report.
UK Finance’s annual fraud report has revealed more woeful results in the country, revealing the scale of fraud taking place, as well as how criminals took advantage of people’s doubts and fears during the pandemic to commit fraud, which is often being exploited by weaknesses outside the banking system.
Authorised push payment (APP) fraud losses have risen again.
There were 195,996 incidents of APP scams in 2021 with gross losses of £583.2m.
According to UK Finance, this included £214.8m lost to impersonation scams, where criminals impersonate a range of organisations to trick people into giving away their personal and financial information, which was the largest category of APP losses.
Some £171.7m, meanwhile, was lost to investment scams.
The 99,733 cases of purchase scams made it the most common type of scam, accounting for 51 percent of all cases; however, total losses for this kind of scam were only £64.1m, according to UK Finance.
A total of £271.2m of losses were returned to victims of APP scams, accounting for 47 percent of losses, and data has also shown that £238.1m of losses were returned to victims under the APP code, accounting for 51 percent of losses in these cases.
The banking sector’s approach to dealing with APP fraud has encountered criticism from consumer interest group Which?.
In May, it revealed that UK scam victims face half-hour waits and hefty call fees when they dial their bank's fraud lines.
“Criminals targeted people through a variety of sophisticated scams, with much of the criminal activity taking place outside the banking sector, often involving online and technology platforms,” commented Katy Worobec, managing director of economic crime at UK Finance.
“This is why we continue to call for other sectors to play a greater role in helping protect customers from the scourge of fraud.”
Worobec added that there is a need for a coherent, agreed message with government, law enforcement, telecommunications, financial services and technology sectors collaborating together to tackle the UK’s fraud problem.
The subject is proving to be a live issue across the spectrum, with home secretary Priti Patel announcing the relaunch of the Joint Fraud Taskforce in October last year to encourage public-private sector partnerships.
The payments industry has had its tail between its legs on the matter in recent months, and last week NatWest’s payments chief exclaimed on a panel: “Shame on us.”
In UK Finance’s report, Worobec continued to point out that online platforms — search engines, social media and shopping platforms — are the gateway to almost all online activity.
“They must provide a barrier to fraud and not a conduit,” she said.
“We believe that collaboration with telecommunications and technology stakeholders will help us develop a comprehensive approach to stem the flow of fraud,” she said.
UK Finance chief executive David Postings is a co-chair of the Online Fraud Steering Group (OFSG), together with techUK and the National Economic Crime Centre (NECC).
This was set up in April 2021 and brings together major representatives from the tech and digital sectors, as well as UK Finance members, to drive progress among all stakeholders in combating fraud initiated online.
Meanwhile, unauthorised fraud, where the account holder themselves does not provide authorisation and the transaction is carried out by a criminal, saw a decrease in 2021, according to UK Finance.
Overall, unauthorised financial fraud losses across payment cards, remote banking and cheques totalled £730.4m in 2021, a decrease of 7 percent compared with 2020.
In these instances, victims of unauthorised payment card fraud are legally protected against losses and industry analysis shows customers are refunded in excess of 98 percent of all confirmed cases.
“Unauthorised fraud losses fell last year, but this type of criminal activity remains a major problem,” said Worobec.
Yet, through the introduction of new measures such as strong customer authentication (which was introduced in April), coupled with continued investment in technology, the banking and finance industry prevents significant amounts of fraud from taking place, she insisted.
“Fraud has a devastating impact on victims and the money stolen funds serious organised crime, as well as imposing significant costs on the wider economy,” said Worobec.
Commenting on upcoming legislative work, Worobec welcomed the Economic Crime and Corporate Transparency Bill as a significant development.
This provides the opportunity for the government to give new powers on information sharing and tracking stolen money, she said. “These are things we have long called for and will support efforts to work together and stop the fraud happening in the first place.”
In the Queen's Speech earlier this year, the UK government committed to enabling the Payment Systems Regulator to require banks to reimburse APP scam losses.
