Fraud: The definitive overview
Any report featuring the title ‘the definitive overview of payments industry fraud’ is never going to make easy reading and the newly published report by UK Finance for 2021 certainly does not make comfortable reading – an end of year report that can only conclude that we must all do better in our fight to thwart the fraudster.
UK Finance publishes both the value of fraud losses and the number of cases. The data is reported to us by its members which include financial providers, credit, debit and charge card issuers, and card payment acquirers.
You’ll find the full report here: UK Finance Annual Fraud Report – the definitive overview of payment industry fraud in 2021.
Total 2021 financial fraud losses by type (% of the total)
The continuing impact of Covid-19 has reshaped the fraud landscape in the past 18 to 24 months.
The pandemic has resulted in certain types of fraud falling while others have risen.
Seven fraud facts
UK Finance’s fraud report is full of facts and figures – here’s seven fraud facts that will make your eyes water:
- A total of over £1.3 billion was stolen through fraud and scams in 2021.
- Unauthorised financial fraud losses across payment cards, remote banking and cheques totalled £730.4 million in 2021 (decrease of seven per cent compared to 2020).
- There were 195,996 reported incidents of Authorised Push Payment (APP) scams in 2021 with gross losses of £583.2 million, compared with £420.7 million in 2020 (an increase of 39%).
- 65.3p in every £1 (£1.4 billion) of attempted fraud was stopped by banks and card companies in 2021.
- Fraud losses on UK-issued cards totalled £524.5 million in 2021 (seven per cent fall from £574.2 million in 2020).
- Faster Payments was used for 97% of fraudulent APP scam payments.
- Despite the imposition of a voluntary reimbursement scheme on the UK’s major banks, just 47% of victims had their losses reimbursed.
Types of fraud
The pandemic has resulted in certain types of fraud falling while others have risen, here’s the list sorted by the amount of change (2021 vs 2020 by value).
Fraud types that have increased (2021 vs 2020 by value):
- +39% Authorised Push Payment fraud (APP)
- +19% Mobile banking fraud
- +1% Remote banking fraud
Fraud types that have reduced (2021 vs 2020 by value):
- -48% Cheque fraud
- -46% Counterfeit card fraud
- -13% Card fraud at UK cash machines
- -12% Card ID theft
- -12% Card fraud aboard
- -11% Card not received fraud
- -10% Internet / ecommerce fraud
- -9% Remote purchase (card not present fraud (internet, phone mail order)
- -7% Debit, credit and other payment card fraud
- -4% UK retail face to face card fraud losses
- -4% Telephone banking fraud
- -2% Lost and stolen card fraud
- -1% Internet banking fraud
Money Box on BBC Radio 4
BBC Radio 4’s Moneybox show presenter Felicity Hannah spoke to UK Finance’s Managing Director of economic crime Katy Worobec about this latest fraud report.
Listen on BBC Sounds:
Unpacking Authorised Push Payment (APP) scams
With 195,996 reported incidents of Authorised Push Payment (APP) scams in 2021 and gross losses of £583.2 million it is worth unpacking the 39% increase in Authorised Push Payment fraud (APP).
UK Finance collates enhanced data which provide further insight into APP scams – the data covers eight scam types and the change between 2020 and 2021 are:
- -17% APP Invoice and mandate scams
- +25% APP purchase scam
- +39% APP impersonation scam
- +45% APP advance fee scam
- +51% APP Impersonation scam (police / bank staff)
- +57% APP investment scam
- +73% APP romance scam
- +163% APP CEO fraud
We need to fight together
Authorised fraud losses rose again this year as criminals targeted people through a variety of sophisticated scams, with much of the criminal activity taking place outside the banking sector, often involving online and technology platforms. This is why we continue to call for other sectors to play a greater role in helping protect customers from the scourge of fraud.
Katy Worobec, managing director of Economic Crime at UK Finance,
These numbers provide further worrying proof of the scale and seriousness of the fraud taking place in the UK. We need to fight together, with better collaboration and knowledge sharing between banks, the government, regulators, telecoms and social media companies, and law enforcement. We need to increase public awareness of the risks of fraud. And we need to share data and technology that can spot the crime and enable banks and payment providers to intervene before it happens.
Kate Frankish, chief business development officer and anti-fraud lead at Pay.UK
Well, this was always going to happen…..: “huge rise in authorised push payment (APP) fraud in 2021, with losses 39% up on the same period in 2020.” The PSR needs to mandate CoP far beyond the big banks. And Kate Frankish is right “we need to share data and technology that can spot the crime and enable banks and payment providers to intervene before it happens.”
Louise Beaumont SVP Global Open Banking & Open Finance Industry & Policy Engagement
Payment method utilised for APP fraud
The UK Finance data shows the type of payment method the victim used to make the payment in the authorised push payment scam.
- Faster Payments was used for 97 per cent of fraudulent APP scam payments.
- CHAPS was the least common payment method, representing only 0.2 per cent of cases, the high-value nature of transactions using this payment type meant that it accounted for four per cent of the total value.
With an increase of APP fraud via Bacs (+42%), interbank transfers (+8%) and international transfers (+24%) it is surprising that the latest consultation from the Payment System Regulators (PSR) only focusses on the Faster Payment and CHAPS payment schemes.
Payment channels utilised for APP fraud
The UK Finance data also shows the channel through which the victim made the authorised push payment. The most common payment channel was mobile banking which accounted for 58 per cent of the payment volume but only 30 per cent of the loss, indicating the typically lower payment limits available to customers within the mobile banking channel.
We must all do better in our fight to thwart the fraudster
Take Five is a national campaign that offers straightforward and impartial advice to help everyone protect themselves from preventable financial fraud. This includes email deception and phone-based scams as well as online fraud – particularly where criminals impersonate trusted organisations.
Led by UK Finance, the campaign is delivered with and through a range of partners in the UK payments industry, financial services firms, law enforcement agencies, telecommunication providers, commercial, public and third sector organisations.
35 major banks and buildings societies have signed up to the Take Five Charter, bringing the industry together to give people simple and consistent fraud awareness advice.
To help everyone stay safe from fraud and scams, Take Five to Stop Fraud urges customers to follow the campaign advice: and the police. They spend hours researching you hoping you’ll let your guard down for just a moment. Stop and think. It could protect you and your money.
- STOP – Taking a moment to stop and think before parting with your money or your information could keep you safe.
- CHALLENGE – Could it be fake? It’s ok to reject, refuse or ignore any requests. Only criminals will try to rush you or panic you.
- PROTECT – Contact your bank immediately if you think you’ve fallen for a scam and report it to Action Fraud. If you are in Scotland, please report to Police Scotland directly by calling 101 or Advice Direct Scotland on 0808 164 6000.
To find out more about the campaign visit: http://www.takefive-stopfraud.org.uk
The definitive overview of payments industry fraud
You’ll find the full report here: UK Finance Annual Fraud Report – the definitive overview of payment industry fraud in 2021.