In just the first six months of 2023, fraudsters swiped over £500 million from unsuspecting fraud victims, as revealed in the newest banking industry fraud report. This startling figure amplifies the need for robust fraud prevention measures. It also raises concerns about how we’re tackling the issue as a society.
Online Platforms: Breeding Grounds for Fraud
UK Finance, a key player in the finance trade sector, has urged social media and online companies to ramp up their efforts to combat fraud. These platforms often serve as launching pads for various scams, making fraud prevention all the more challenging. The call to action suggests that other sectors should shoulder some of the responsibility for combatting criminal activities that largely unfold on their platforms.
Banks are further urging social media companies to assist in tackling fraud, advocating that the big tech firms should bear the responsibility of reimbursing victims for fraud that starts on their platforms. As the losses from scams such as Authorised Push Payment (APP) fraud continue to rise, this topic will remain a priority.
The Rise of Authorised Push Payment Fraud
While the total number of fraud cases and losses showed a downward trend, Authorised Push Payment (APP) fraud—also known as bank transfer fraud—stood as a glaring exception. The number of APP fraud cases soared by 22%, reaching 116,324 cases, compared to the same period in the previous year. Interestingly, the losses from these cases remained relatively stable, decreasing by a meagre 1% to £239.3 million.
A deep dive into payment methods reveals alarming increases in APP fraud losses. For instance, losses through intra-bank transfers skyrocketed by 244%. While losses via CHAPS, used for high-value transactions like home deposits, jumped by 49%.
Social Media’s Role in APP Fraud
According to UK Finance, a staggering 75% of APP fraud cases originated online. Fraudsters often lure fraud victims through search engines and social media investment opportunities. Additionally, romance scams on online dating platforms and purchase scams through auction websites accounted for two-thirds of all APP fraud instances.
The Online Safety Bill aims to enforce preventative measures on online platforms. This legislation mandates the swift removal of harmful content. It gives Ofcom, the communications regulator, the power to enforce compliance through fines and other actions.
Banks Taking Action
During the first half of 2023, banks reimbursed £152.8 million of APP losses, equating to 64% of the total amount. A mandatory reimbursement scheme will come into effect in late 2024 across all payment companies using the Faster Payments network.
Unauthorised fraud losses across different payment mediums like cards and remote banking fell to £340.7 million. In contrast, banks successfully thwarted attempts to steal a further £651 million. Yet, losses due to card ID theft surged by 57% to £33.1 million, posing new challenges in fraud prevention.
Legal Protections and Recourse for Fraud Victims
If you find yourself a fraud victim, you have legal safeguards. UK Finance confirms that 98% of fraud victims get fully refunded. Should your bank or credit card provider decline to reimburse your losses, it’s crucial to file a formal complaint. If dissatisfied with their response, you can escalate your case to the Financial Ombudsman Service.
The increasing instances of APP fraud and the major role of online platforms in facilitating scams underline the importance of bolstering fraud awareness. As the most common crime in the UK, fraud has significant financial and emotional consequences for its victims. The need for robust fraud prevention has never been greater, and it’s high time all stakeholders, including the public, took this seriously.
The Road Ahead
The most disheartening aspect of these recent statistics is the fact that, although fraud may appear complex and sophisticated, it often can be prevented using a fundamental set of skills. If the UK were to prioritise fraud prevention more earnestly, there would be various schemes and campaigns aimed at boosting fraud awareness.
Imagine the immense financial and emotional toll that could be mitigated if more individuals understood this simple fact. Your bank or building society would never phone to ask you for money transfers or your security details. Until more is done, we can expect these troubling numbers to continue to rise.
