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UK Finance’s latest fraud report has highlighted a persistent threat to the payments ecosystem despite advances in security measures.
The industry group has released its 2024 annual fraud report, highlighting the significant amount stolen by criminals through payment fraud and scams in 2023.
The report reveals that £1.17bn was lost to both unauthorised and authorised payment fraud, although this represents a slight improvement with a 4 percent decrease compared with the figures from 2022.
“Nearly £1.2 billion was stolen from customers in 2023 and the criminals who commit these crimes destroy lives and damage our society,” said Ben Donaldson, managing director of economic crime at UK Finance. “The money stolen funds serious organised crime and victims often suffer emotional damage as fraud is a pernicious and manipulative crime.”
Donaldson said the financial services industry remains at the forefront of efforts to protect customers, prevent fraud and support those who fall victim.
“With reimbursement rules set to change we risk even more money getting into criminal hands, unless the technology and telecommunication sectors take proper action to stop the fraud that proliferates on their platforms and networks,” he said.
Authorised transactions
In 2023, authorised push payment (APP) fraud losses totalled £459.7m, down 5 percent from the previous year, with £376.4m in personal losses and £83.3m in business losses.
APP fraud cases rose 12 percent to 232,429, driven mainly by a 34 percent increase in purchase scams, which reached more than 156,000 cases and £85.9m in losses. Purchase scams, meanwhile, made up 67 percent of all APP cases. Romance scams saw losses rise 17 percent to £36.5m, with cases up 14 percent.
Conversely, fraud involving criminals impersonating banks or police fell by 37 percent, with related losses down 28 percent due to increased consumer education, according to UK Finance.
In total, £287.3m of APP losses were reimbursed to victims in 2023, covering 62 percent of total losses, which is up from 59 percent in 2022.
UK Finance took aim at “APP fraud enablers”, stating that these losses are largely driven by the misuse of online platforms and telecommunications, as criminals use these channels for investment, romance and purchase scams, as well as for scam calls, texts and emails to steal personal details.
UK Finance data shows that 76 percent of APP fraud cases originated online, mostly lower-value scams like purchase fraud, accounting for 30 percent of total losses.
Additionally, 16 percent of cases came from telecommunications, often higher-value scams like impersonation fraud, making up 43 percent of total losses.
Reacting to the report, a spokesperson for the Payment Systems Regulator told Vixio that its APP fraud reimbursement requirement, due to be implemented on October 7, makes clear that having sufficient financial controls in place is a necessity for payment firms operating in the UK.
“Our approach incentivises all payment firms, irrespective of their size or structure, to do more to prevent APP fraud from happening in the first place, and ensures victims benefit from significantly higher, more consistent protections,” the PSR spokesperson said.
“We remain of the view that social media and telecoms firms can and should do much more to prevent APP fraud. The UK’s Online Fraud Charter will help raise standards of protection against fraud on social media and telecoms platforms.”
Unauthorised transactions
Losses from unauthorised transactions across payment cards, remote banking and cheques totalled £708.7m in 2023, a 3 percent decrease from 2022. The number of cases also dropped by 2 percent to 2.7m.
A 9 percent decline in remote purchase fraud, continuing a five-year trend, significantly contributed to this reduction. The implementation of strong customer authentication (SCA) over the past two years has been crucial in verifying customer identities and reducing fraud.
However, card ID theft surged by 53 percent to £79.1m, with criminals using stolen information to take over accounts or apply for new credit cards.
The financial sector prevented 7 percent more unauthorised fraud, stopping £1.25bn in losses. Victims are legally protected and more than 98 percent receive full refunds, according to UK Finance.
