The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

With the payments sector invested in delivering mandatory reimbursement under the new PSR regulation in October, unauthorised fraud still looms large, with 2.7 million cases detected in 2023. 

What’s unauthorised fraud? 

An unauthorised fraud is one where the account holder doesn’t provide authorisation for a transaction, and the eventual payment is carried out by a third party, while the customer does not receive the good or service they agreed to. 

Some examples are:

• card fraud, varying from lost and stolen cards, card not received, card not present and counterfeit card frauds
• cheque fraud, including counterfeit, forged and altered cheques
• account takeovers via remote banking, through internet, phone or mobile banking
• Inadvertently being enrolled in wallets (google pay or apple pay) while confirming an alternate transaction
• Subscription services posing as single transactions

While the scale of losses and cases are significant, in 2023 the industry prevented more than £1.2bn of unauthorised fraud. We’re stopping more unauthorised fraud than we’re missing but there’s still a lot to do, and the internet continues to offer opportunities to fraudsters who want to make a fast buck. 

Strategies to prevent unauthorised fraud:

1. Real time transaction monitoring 
   There’s nothing more impressive than a bank that can accurately spot and quickly stop fraud in its tracks. Real time transaction monitoring and well-trained models can prevent fraud at the door. Geolocation and behavioural biometrics are also important elements of recognising fraud in real time. 
2. Tactical expertise deployment 
   Fraudsters will attempt large scale assaults— especially at unreasonable hours when they think we’re not watching. DCM have recently helped a UK fintech with a tactical overnight deployment of well-trained experts to investigate and clear Fraud alerts, disrupting an emerging pattern at speed. 
3. Customer education
   Do your customers know that missing mail might be a sign their details have been stolen? Do they know that regular checking of their credit files might help them spot anomalies? Are you giving them information about protective registration at CIFAS? Any fraud education also needs to be shared with business banking customers, who are just as vulnerable.
4. Victim support
   Fraud leaves people feeling confused, ashamed and vulnerable. We’re duty bound to put an arm around them, offer reassurance and as mush support as we can. In the long term, a customer remembers the bank that advocated and cared for them. 
5. Inter sector data sharing
   Inter sector data sharing would help not only identify fraud but also aid in victim support. Currently fraud is reported in a fragmented manner, a holistic approach helps target fraud at source and upstream fraud.
   

Consider what’s next? 

Victims of unauthorised fraud suffer emotional damage as well as financial loss and inconvenience. Compromised accounts can lead to a reduction in trust between a customer and their banking provider, and their personal information may have been exploited too, leaving long term consequences. Best in class fraud detection means increased trust and support for customers most in need of our support at a tough time. 

Did you know?

You can search your email address at www.haveibeenpwned.com to see how many leaks your email address has been attached to. It’s a good way of visualising just how much data is out there about all of us, ready to be exploited. You can check out tips for keeping your information safe at Take Five to Stop Fraud and the National Cyber Security Centre.

About DCM:

DCM provide rapid response outsourcing and consulting services. Our tactical teams are deployed into Financial Service firms to prevent and detect Financial Crime. For more information on our Managed Services, Outsourcing and Advisory capability, reach out to one of our team info@dcmoperations.com or via the website www.dcmoperations.com