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Banks and card companies prevented £1,458.6 million in unauthorised financial fraud last year, equivalent to £2 in every £3 of attempted unauthorised fraud being stopped, the latest data from UK Finance shows.
In 2017, fraud losses on payment cards fell 8 per cent year-on-year to £566.0 million. At the same time, card spending increased by 7 per cent, meaning card fraud as a proportion of spending equates to 7.0p for every £100 spent - the lowest level since 2012. In 2016 the figure stood at 8.3p.
For the first time, annual data on losses due to authorised push payment scams (also known as APP or authorised bank transfer scams) has also been collated. A total of £236.0 million was lost through such scams in 2017.
The unauthorised fraud data on payment cards, remote banking and cheques for 2017 shows:
The new authorised push payment scams data, collected for the first time in 2017, shows:
Katy Worobec, Managing Director of Economic Crime at UK Finance, said:
Fraud is an issue that affects the whole of society, and one which everyone must come together to tackle. The finance industry is committed to playing its part - investing in advanced security systems to protect customers, introducing new standards on how banks respond to scam victims, and working with the Joint Fraud Taskforce to deter and disrupt criminals and better trace, freeze and return stolen funds.
We are also supporting the Payment Systems Regulator on its complex work on authorised push payment scams, providing the secretariat for its new steering group. It's a challenging timetable, but it is important that we get it right to stop financial crime and for the benefit of customers.
The finance industry is responding to the ongoing threat of all types of fraud and scams by:
To help everyone stay safe from fraud and scams, Take Five to Stop Fraud urges customers to follow the campaign advice:
Tony Blake, Senior Fraud Prevention Officer at the Dedicated Card and Payment Crime Unit, said:
With criminals using social engineering to target people and businesses directly, it's vital that everyone follows the advice of the Take Five campaign. Always stop and think if you are ever asked for your personal or financial details. Remember, no bank or genuine organisation will ever contact you out of the blue and ask you to transfer money to another account.
Unauthorised fraud
In an unauthorised fraudulent transaction, the account holder does not provide authorisation for the payment to proceed and the transaction is carried out by a third-party.
Authorised fraud
In an authorised push payment (APP) scam, the account holder themselves authorises the payment to be made to another account. If a customer authorises the payment themselves, current legislation means that they have no legal protection to cover them for losses - which is different for an unauthorised transaction.
Banks will always endeavour to help customers recover money stolen through an authorised push payment scam but customers typically only approach their bank after the payment has been processed, once they realise they have been duped. By this time the criminal has often withdrawn the stolen funds and the customer's money has gone. Alongside the extensive work already underway through the Joint Fraud Taskforce, UK Finance is also currently working with the Payment Systems Regulator on its proposals to tackle these scams.
Behind the data
Fraud intelligence points towards criminals? use of social engineering tactics as a key driver of both unauthorised and authorised fraud losses. Social engineering is a method through which criminals manipulate people into divulging personal or financial details, or into transferring money directly to them, for example thorough impersonation scams and deception.
In an impersonation scam, a fraudster contacts a customer by phone, text message or email pretending to represent a trusted organisation, such as a bank, the police, a utility company or a government department. Under this guise, the criminal then convinces their victim into following their demands, sometimes making several separate approaches as part of one scam.
Data breaches also continue to be a major contributor to fraud losses. Criminals use stolen data to commit fraud directly, for example card details are used to make unauthorised purchases online or personal details used to apply for credit cards. Stolen personal and financial information is also used by criminals to target individuals in impersonation and deception scams, and can add apparent authenticity to their approach.
Ends
<p>For more information please call Giles Mason in the UK Finance press office on 020 7416 6750 or mail <a>press@ukfinance.org.uk</a>. Spokespeople are available on request.</p> <p>Notes to Editor</p> <ol><li>The full set of authorised and unauthorised fraud and scams data for 2017, including breakdowns by fraud type, is available <a href="/system/files/UKFinance_2017-annual-fraud-update-FINAL.pdf"><font color="#0066cc">here</font></a>.</li> <li>UK Finance is providing the secretariat for the <a href="https://www.psr.org.uk/psr-publications/news-announcements/PSR-confirms… color="#0066cc">Payment Systems Regulator?s new steering group</font></a> tasked with designing a contingent reimbursement model for victims of authorised push payment scams.</li> <li>Criminals use a range of social engineering tactics to commit fraud. This includes impersonating someone from a bank or a police officer, claiming a fraud has been spotted on a customer?s account; using phishing emails purporting to be from major online retailers; sending fake invoices to businesses; offering fraudulent investment opportunities; and posing as a house purchaser?s solicitor.</li> <li>UK Finance is a new trade association which was formed on 1 July 2017 to represent the finance and banking industry operating in the UK. It represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation brings together most of the activities previously carried out by the Asset Based Finance Association, the British Bankers? Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.</li> <li>The Dedicated Card and Payment Crime Unit (DCPCU) is a unique pro-active police unit, with a national remit, formed as a partnership between Financial Fraud Action UK, the City of London Police and the Metropolitan Police together with the Home Office. It is fully sponsored by the cards and banking industries, with an on-going brief to investigate, target and, where appropriate, arrest and seek successful prosecution of offenders responsible for card, cheque and payment fraud crimes. It is headed up by a Detective Chief Inspector and comprises officers from the Metropolitan and City of London police forces who work alongside banking industry fraud investigators and support staff.</li> </ol>
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