Banking industry prevented £1.66 billion of fraud in 2018

A total of £1.66 billion of unauthorised fraud was prevented by the banking and finance industry in 2018. This is comprised of:
- £1.12 billion in attempted unauthorised card fraud
- £318 million in attempted unauthorised remote banking fraud
- £218 million in attempted unauthorised cheque fraud
A total of £1.20 billion was stolen by criminals committing fraud last year. This is comprised of:
- £354 million in authorised fraud
- £845 million in unauthorised fraud

The finance industry prevented £1.66 billion of unauthorised fraud during 2018, effectively stopping £2 in every £3 of attempted unauthorised fraud, according to the latest report, Fraud the Facts 2019 published today from UK Finance.

During the same period, a total of £1.20 billion was stolen by criminals committing both authorised and unauthorised fraud.

Industry research suggests that the theft of personal and financial information through social engineering caused by data breaches outside the financial sector was a major contributor to the fraud losses. Stolen data is used to commit fraud both directly and indirectly. There were several high-profile data breaches involving significant brands during 2018.

Katy Worobec, Managing Director of Economic Crime at UK Finance, said:

Fraud is a crime which poses a major threat to us all - it can have a devastating impact on victims and the money stolen funds even more damaging crimes such as terrorism, drug trafficking and people smuggling. Every business, from online retailers to social media companies, as well as the public sector, has a duty to work together to beat fraud and prevent stolen data getting into the hands of criminals.

Last month, the finance industry and consumer groups agreed a voluntary Code which will increase protection for customers from authorised push payment scams. It delivers a significant commitment from signatories to reimburse victims when the customer has met the standards expected of them under the Code. At the same time the industry continues to fight fraud on every front to protect customers and prevent this kind of crime - investing in advanced security systems and new ways to track stolen funds, assisting law enforcement in tackling the criminals and supporting the government in improving the ways in which intelligence is shared.

Minister of State for Security and Economic Crime, Ben Wallace said:

Fraud can have a devastating impact on victims and our new Serious and Organised Crime Strategy sets out how we will mobilise the full force of the state against this type of crime.

We are working with industry, law enforcement and regulators to reduce the number of fraud victims and to ensure they get support and advice on practical steps they can take to protect themselves.

Meanwhile the new Economic Crime Strategic Board is working with senior figures from the UK financial sector to tackle this, and the National Economic Crime Centre is coordinating the law enforcement response.

The data published by UK Finance covers both unauthorised and authorised fraud.

Unauthorised fraud

In an unauthorised fraudulent transaction, the account holder themselves does not provide authorisation for the payment to proceed and the transaction is carried out by a third-party. Customers are legally protected against losses caused by unauthorised fraud. Industry research indicates that customers are fully refunded in over 98 per cent of unauthorised fraud cases.

Total losses due to unauthorised fraud across payment cards, remote banking and cheques in 2018 were £845 million, an increase of 16 per cent compared to 2017. Included within this overall total:

Losses due to unauthorised transactions on payment cards increased 19 per cent to £671 million. The industry prevented £1.12 billion in attempted unauthorised card fraud, 14 per cent more than in 2017. Three-quarters of the card fraud losses (£506 million) was due to remote purchase fraud, where stolen card details are used to buy something online, over the phone or via mail order.
Losses due to unauthorised remote banking fraud totalled £153 million, 2 per cent lower than 2017. This category covers unauthorised fraud through internet banking, telephone banking and mobile banking. Banks prevented £318 million of attempted unauthorised remote banking fraud.
Cheque fraud losses rose by 109 per cent to £21 million. The volume of fraudulent cheques increased by only 16 per cent, indicating that a small number of high-value fraudulent transactions made during the year led to the rise in losses rather than a change to the longer-term downward trend in this type of fraud. A total of £218 million of attempted unauthorised cheque fraud was prevented.
There was a total of 2,651,556 cases of unauthorised financial fraud.

Authorised push payment scams

In an authorised push payment (APP) scam, a customer is duped into authorising a payment to another account which is controlled by a criminal.

The APP scam data for 2018 shows:

A total of £354 million was lost through APP scams, split between personal (£228m) and business (£126m) accounts.
In total there were 84,624 APP scam cases, split between personal (78,215 cases) and non-personal (6,409 cases) accounts.
Financial providers were able to return a total of £83 million of the losses.

In February, the Authorised Push Payment Scams Voluntary Code was agreed following work between the industry, consumer groups and the Payment Systems Regulator. The Code, which comes into effect on 28 May 2019, will bring new protections for customers of payment service providers who sign up to it. The Code delivers a significant commitment from all firms who sign up to it to reimburse victims of authorised push payment scams in any scenario where their bank or payment service provider is at fault and the customer has met the standards expected of them under the Code. Currently, under existing legislation, if a customer authorises the payment themselves they have no legal protection to cover them for losses.

UK Finance only began collating data on APP scams from 2017 onwards. Losses due to APP scams in 2017 totalled £236 million across 43,875 cases. The data published today is not directly comparable to these figures as new industry guidelines introduced in January 2018 have improved the identification and reporting of APP scams. Four additional banks also began reporting the data to UK Finance from 2018.

Area of expertise:

Economic crime

Notes to editor

1. Behind the changing fraud figures
 The theft of personal and financial data through social engineering was a major contributor to fraud losses in 2018. Stolen data is used to commit fraud both directly and indirectly. For example, compromised card details are used to make unauthorised purchases online and personal details are used to take over an account or apply for a credit card in someone else?s name. Criminals also use personal and financial data to groom and defraud customers, using information gained about an individual to add apparent authenticity to a scam.
 A common form of social engineering is an impersonation scam, when a criminal will typically pose as a representative from a genuine organisation such as a bank, the police, a retailer, a utility company or a government department to persuade people to reveal their personal and financial information or transfer money. Fraudsters use a range of methods to contact customers in these types of scams, including by phone, text message, email and social media posts.
 During 2018 there were a number of significant data breaches which received extensive media coverage, along with a continued level of smaller-scale breaches. These incidents included significant brands whose customer information was compromised as a result of a data breach. Data breaches cover a range of sectors and occur outside of the control of the banking industry. Information stolen through a data breach can be used for months or even years after the event.
 2. The industry response
 The finance industry is committed to tackling fraud and scams by:
<ul><li align="left">
Investing in advanced security systems to protect customers, including real-time transaction analysis, behavioural biometrics on devices and technology to identify the different sound tones that every phone has and the environment that they are in.</li>
<li align="left">
Delivering the Banking Protocol ? a ground-breaking rapid response scheme through which branch staff can alert police and Trading Standards to suspected frauds taking place. The system is operational in every police force area and <a href="https://www.ukfinance.org.uk/bank-branch-response-scheme-prevents-victi… £38 million</a> in fraud and enabled 231 arrests in 2018.</li>
<li align="left">
Sponsoring a specialist police unit, the Dedicated Card and Payment Crime Unit (DCPCU), which tackles the organised criminal groups responsible for financial fraud and scams. In 2018, <a href="https://www.ukfinance.org.uk/press/press-releases/finance-industry-spon… Unit prevented</a> an estimated £94.5 million of fraud, secured 48 convictions and disrupted 11 organised crime groups.</li>
<li align="left">
Working with consumer groups as part of the Authorised Push Payment Steering Group to <a href="https://www.ukfinance.org.uk/press/press-releases/uk-finance-responds-p… a Voluntary Code</a> to better protect customers and reduce the occurrence of APP fraud. The Code was published in February and will become effective for signatory firms on 28 May 2019.</li>
<li align="left">
Working with Pay.UK to implement <a href="https://www.wearepay.uk/new-anti-money-laundering-technology-sees-uk-fr… Insights Tactical Solution (MITS)</a>, a new technology that will help track suspicious payments and identify money mule accounts, and <a href="https://www.wearepay.uk/confirmation-of-payee/">Confirmation of Payee</a>, an account name checking service for when a payment is made, that will help to prevent authorised push payment scams.</li>
<li align="left">
Hosting and part-funding the government-led programme to reform the system of economic crime information sharing, known in the industry as Suspicious Activity Reports (SARs), so that it meets the needs of crime agencies, regulators, consumers and businesses.</li>
<li align="left">
Working closely with mobile network operators and the messaging industry to trial a new anti-spoofing system to help root out scam text messages.</li>
<li align="left">
Helping customers stay safe from fraud and spot the signs of a scam through the <a href="https://takefive-stopfraud.org.uk/">Take Five to Stop Fraud</a> campaign, in collaboration with the Home Office.</li>
<li align="left">
Joining with government and law enforcement to deter and disrupt the criminals responsible and better trace, freeze and return stolen funds.</li>
<li align="left">
Implementing multi-factor authentication for higher-value and higher-risk transactions, with new rules coming into force in September 2019.</li>
</ul> 3. How to stay safe
 To stay safe, customers are urged to follow the advice of the Take Five to Stop Fraud campaign:
<ul><li>
A genuine bank, organisation or the police will never contact you out of the blue to ask for your PIN, full password or to move money to another account.</li>
<li>
Only give out your personal or financial details to use a service that you have given your consent to, that you trust and that you are expecting to be contacted by.</li>
<li>
Never automatically click on a link in an unexpected email or text.</li>
<li>
Always question uninvited approaches in case it?s a scam. Instead, contact the company directly using a known email or phone number.</li>
</ul> 4. The full 2018 authorised and unauthorised fraud data, including breakdowns by fraud type, is available in the Fraud the Facts 2019 report <a href="https://www.ukfinance.org.uk/policy-and-guidance/reports-publications/f…;. UK Finance has also published a timeline showing the industry?s actions to stop fraud and protect customers which is available <a href="https://www.ukfinance.org.uk/policy-and-guidance/reports-publications/f…;
 5. UK Finance is the collective voice for the banking and finance industry. Representing more than 250 firms across the industry, we act to enhance competitiveness, support customers and facilitate innovation.