Fraud remains a persistent threat to businesses, consumers and the growth of the economy, not to mention the reputation of the UK, according to a banking and finance industry trade association.
Criminal gangs are simply bypassing banks’ advanced security systems to directly target customers, according to UK Finance, which said UK fraud levels should be considered a national security threat.
Purchase scams accounted for more than half of incidents where people were tricked into transferring money to a fraudster in the first half of this year, according to UK Finance’s figures.
Some 56% of authorised push payment (APP) cases in the first half of 2022 were purchase scams, it said.
Overall, there were 95,219 incidents of APP scams in the first half of the year, with gross losses of £249.1 million, down 17% by value compared with the first half of 2021.
Some £140.1 million was returned to customers in the first half of 2022.
Some £90.5 million of funds lost to APP scams was due criminals impersonating other people, such as bank staff or the police.
And £61.2 million was lost to investment scams.
While purchase scams were the most common type of AP fraud, accounting for 53,782 cases, they accounted for a smaller amount of losses, at £31.1 million.
Romance scams accounted for £16.6 million-worth of APP fraud losses.
UK Finance said it has long been calling for more action across different sectors and it will continue working with the Government on upcoming legislation in this area.
Katy Worobec, managing director of economic crime at UK Finance, said: “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.
“However, criminal gangs simply bypass the advanced security measures 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.”
At present, many banks are signed up to a voluntary APP scams reimbursement code, but there have been concerns about inconsistencies in how it is being interpreted. Some banks also offer their own guarantees, which means the likelihood of being reimbursed can depend on who someone banks with.
But, going forward, customers should have more consistency. Under recent proposals from the Payment Systems Regulator (PSR), both the sending and receiving banks will bear the responsibility for allowing fraudulent payments, further incentivising banks who have accounts held by fraudsters to act.
The Government has also said that the PSR will be able to require banks to reimburse APP scam losses under measures in the Financial Services and Markets Bill.
UK Finance said that, overall, more than £609.8 million was stolen by criminals through authorised and unauthorised fraud in the first half of 2022, down 13% compared with the same period in 2021.
The banking and finance industry prevented a further £583.9 million of unauthorised fraud from getting into the hands of criminals.
Rocio Concha, Which? director of policy and advocacy, said: “The UK is in the grip of a scams epidemic, with victims facing devastating financial and emotional consequences when they are targeted by fraudsters.
“While it’s good to see a reduction in the level of bank transfer scams, reimbursement rates are still far too low. Too many people are being turned away by their bank or made to feel like they are to blame for their misfortune, when in reality they are innocent victims of criminal gangs.
“New legislation and regulatory rules set out by the Payment Systems Regulator to make reimbursement mandatory in all but exceptional cases cannot come soon enough, and must be backed with tough enforcement measures for any banks that fail to treat their customers fairly.”
Paul Davis, director of fraud prevention, TSB said: “At a time when finances are already squeezed, the latest data highlights a large gap where innocent victims of fraud are still not being refunded for their losses.
“Having offered our unique fraud refund guarantee for over three years, it’s disappointing to see that the industry refund rate has not increased more. But responsibility should not just rest with banks and other sectors need to play their part in protecting consumers.”
Emma Lovell, chief executive of the Lending Standards Board, which oversees the voluntary APP scams reimbursement code, said: “It is encouraging to see that the amount lost to APP scams has decreased 17% in the first half of the year compared to that in 2021, suggesting that warnings from banks and building societies, along with their education and prevention efforts, are having an impact.
“But the key to stopping more of these criminals is having multiple lines of defence, rooting out as many scams as possible before they reach would-be victims. This means bringing other sectors into the APP fraud prevention fold.”