Criminals managed to abscond with an astonishing half a billion pounds during the initial half of 2023, as disclosed by the most recent report on banking industry fraud. UK Finance, the trade association for the financial sector, has issued a stern caution that a significant portion of these scams originate from social media and other online enterprises. They are now urging other industries to step up their efforts in combatting this criminal activity, which is increasingly finding a home on their platforms.
For an in-depth examination of the statistics and guidance on how to recover your funds if you’ve fallen victim to a scam, continue reading.
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Rise in Authorised Push Payment Fraud
While the aggregate losses and reported instances of fraud dropped in the first half of the year, one form of fraud known as Authorised Push Payment (APP) fraud, or bank-transfer fraud, saw an increase. The number of APP fraud cases surged by 22% to 116,324 when compared to the same period in 2022, although the losses remained relatively steady, declining by just 1% to £239.3 million.
If we break down these statistics based on the method of payment, there was a substantial 244% surge in APP fraud losses via intra-bank transfers (the movement of funds between two accounts within the same financial institution), as well as a 49% increase in losses through CHAPS transactions (commonly used for high-value transfers, like property deposits).
UK Finance reported that approximately three-quarters of APP fraud cases initiated online. These scams encompassed investment schemes advertised on search engines and social media, romance scams carried out through online dating platforms, and purchase scams promoted via social media and auction websites, accounting for two-thirds of all APP fraud cases.
Which? has effectively led a campaign to push social media companies and tech giants, such as Google and Meta, to take more proactive measures in preventing fraud from proliferating on their platforms. Under the Online Safety Bill, online platforms will be obligated to obstruct and promptly remove harmful content. Ofcom, the communications regulator, will be entrusted with ensuring compliance and will possess the authority to enforce penalties, including fines.
Fraud Figures in the Banking Industry
Recovering Your Funds
In the first half of 2023, banks collectively reimbursed £152.8 million in losses caused by APP fraud, which equates to 64% of the total amount lost. There are plans to introduce a compulsory reimbursement scheme for all payment firms utilising the Faster Payments network in late 2024. This move is expected to ensure that victims of APP fraud receive restitution in all but the most extraordinary cases, although some concerns about the proposed rules have been raised by Which?
Decline in Unauthorised Fraud
Losses stemming from unauthorised fraud, encompassing payment cards, remote banking, and cheques, decreased to £340.7 million. The total number of recorded instances also fell by 10% compared to the preceding year, amounting to 1.26 million cases. Banks succeeded in preventing an additional £651 million from being stolen through unauthorised fraud.
Remote purchase or card-not-present fraud contributed significantly to payment-card losses, which have now decreased to £173.8 million – marking the lowest level reported in eight years. These reduced losses can be attributed to improved security measures like robust customer authentication.
Nonetheless, it’s worth noting that card ID theft has defied the overall trend, with losses escalating by 57% to reach £33.1 million. This type of unauthorised fraud involves criminals exploiting personal information and card details to either take control of existing accounts or apply for new credit cards. UK Finance has reassured that victims of unauthorised fraud are covered by legal protection, and refunds are provided in 98% of cases.
If your bank or credit card provider refuses to reimburse losses from unauthorised fraud, it is advisable to file a formal complaint and escalate the matter to the Financial Ombudsman Service if you remain unsatisfied with their response.
