Key Takeaways from the 2023 Fraud Data

From increased pressure to protect customers to more focused reimbursement requirements to publicly reporting scam data to the rise of technologies like GenAI, UK banks faced a storm of change in 2023.

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

Despite these headwinds, the headline is that banks made good progress, with total fraud losses down by 4 per cent in 2023. However, we should not lose sight of the fact that fraudsters have still successfully stolen £1.168 billion. This figure’s sheer size is a constant reminder that more can always be done.  

Authorised Fraud: Scammers Shift Focus

The UK has made a series of significant efforts to turn the tide against scams. UK Finance’s data shows those efforts are paying off, with losses down 5 per cent in 2023 (£485m vs £460m). Purchase scams saw the highest jump, with cases up 34 per cent and losses up 28 per cent compared to the previous year.

Meanwhile, losses for impersonation and investment scams dropped by 28 per cent and 5 per cent, respectively. The average loss for impersonation scams was £7,448 compared to just £549 for a purchase scam. This trend indicates that scammers are shifting their focus to higher volume, lower value attacks, likely due to the controls banks have placed for higher value transactional outliers.

Romance scams are another scam type that increased by 17 per cent. Data shows that victims make an average of 10 payments per romance scam, compared to just 1 in a purchase scam, a signal that scammers are patient at exploiting victim trust.

Unauthorised Fraud: Cross-Channel Fraud Increases

The headline for unauthorised fraud is that losses were also down. They totalled £709m, a decrease of 3 per cent on the previous year.

In terms of fraud types, Card ID theft saw a considerable jump, with losses reaching £79 million in 2023. This is an increase of 53 per cent compared to the previous year and shows how fraudsters are willing and able to work across multiple channels within the bank to succeed more frequently.

CNP losses continue to be the most significant individual loss driver. They totalled £361m but were down by 9 per cent compared to the previous year. Interestingly they are down for the fifth consecutive year and down 29 per cent since their 2018 peak.

For the first time in digital channels, the volume of mobile banking cases exceeded that of web/browser-based cases. This suggests that fraudsters follow users to their preferred banking channels, understanding that it is easier to blend in among normal behaviours if the attack occurs on the user’s channel of choice.

Summary

As we reflect on 2023, it's evident that UK banks continue to make positive strides against fraudsters. Yet the persistence of high fraud figures, despite a general decline, highlights the necessity for continuous innovation. We know that fraudsters will continue to adapt and innovate, therefore, banks and their partners must too.

Moving forward into 2024, enhancing mule detection strategies, leveraging payment networks for broader data visibility, and deepening industry collaboration will emerge as key industry focuses.

Together, these efforts will not only protect individual consumers but can begin to fortify the integrity of the broader financial system.

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