Data from UK Finance indicates criminals stole £571.7 million through unauthorised and authorised fraud in the first half of 2024, representing a 1.5 per cent decrease compared to the first half of 2023.
Banks prevented £710.9 million of unauthorised fraud through advanced security systems, while 72 per cent of APP fraud started online and 16 per cent started through telecommunications networks.
Losses due to unauthorised transactions across payment cards, remote banking and cheques were £358 million in the first half of this year, an increase of five per cent. The total number of recorded cases was just over 1.5 million, an increase of 19 per cent.
One of the main reasons for the overall rise in payment card fraud losses was a 26 per cent increase in card not present cases. Strong Customer Authentication (SCA) has helped to reduce fraud by verifying a customer’s identity; however, evidence has shown that criminals have been socially engineering victims to trick them into divulging one-time passcodes to authenticate online transactions.
Card ID theft cases decreased by 15 per cent with losses down 12 per cent to £29.3 million.
There was a 13 per cent increase in the amount of unauthorised fraud prevented – up to £710.9 million. Victims of unauthorised fraud cases such as these are legally protected against losses and UK Finance research indicates that customers are fully refunded in more than 98 per cent of these fraud cases.
Ben Donaldson, Managing Director of Economic Crime at UK Finance, said: “Fraud continues to pose a major threat in this country with over £570 million stolen through payment fraud in the first half of the year. In addition to the financial impact, this crime can cause severe psychological harm to victims.
“This isn’t a fight we will win alone as our data again shows that most fraud originates online and via telecommunications networks. There have been some improvements made by other sectors, but their actions don’t yet fully match the scale of the problem – more needs to be done to prevent fraudsters exploiting these platforms and networks.
“Earlier this month we saw the introduction of new APP reimbursement rules for customers and while reimbursement is important in the fight against fraud, it can only be part of the solution. On its own it does nothing to prevent or reduce the psychological harms to victims, nor does it prevent organised crime groups from stealing money. That is why the financial services industry is always focused on preventing fraud happening in the first place.
“Criminals will keep adapting, which means we all need to remain focused on reducing fraud and thereby protect customers and society from the adverse effects of this awful crime.”
Dan Holmes, Director of Banking Fraud, Identity & Market Strategy at Feedzai said: “It’s encouraging to see declines in certain fraud categories, in particular APP, thanks in most part to strong investment by banks along with industry collaboration and education programmes. There are gentle changes within the data however to remind us that fraud is adversarial. Increases in unauthorised fraud across multiple channels reminds us that we cannot be complacent. Fraudsters are dynamic, meaning prevention strategies must be too. Continuous innovation and an ability to be agile and adapt quickly remains vital.”
Authorised push payment (APP) fraud losses were £213.7million, down 11 per cent compared with the first half of last year. This comprised £166.5 million of personal losses and £47.2 million of business losses.
The total number of APP cases was down 16 per cent to 97,344, with falls in case numbers across all categories of APP fraud.
The number of purchase scams, where a victim pays in advance for goods or services that are never received decreased by 11 per cent. The number of romance scams, where victims are tricked into believing they are in a relationship, fell by seven per cent and investment scams also decreased in cases by 29 per cent.
The number of fraud cases where criminals impersonate a bank or the police and convince someone to transfer money to a “safe account” fell by 32 per cent and the amount lost to this type of fraud fell by 26 per cent. There has been significant investment made in warning consumers that a bank will never ask someone to transfer money in this way.
In total £126.7 million of APP losses was returned to victims in H1 2024 or 59 per cent of the total loss. New reimbursement rules from the Payment Systems Regulator came into effect on 7 October.
Authorised push payment fraud losses continued to be driven by the abuse of online platforms and telecommunications. Not only do criminals take advantage of these platforms to encourage the transfer of money through investment, romance or purchase scams but criminals also use scam phone calls, text messages and emails to trick people into handing over personal details and passwords.
Typically, criminals first focus their attempts on socially engineering personal information from their victims with a view to committing APP fraud in which the victim makes the payment themselves. If this is not successful, the criminal often has enough personal information to enable them instead to impersonate their victims, with a view to either taking control of their existing accounts or applying for credit cards in their name.
UK Finance data on the sources of APP fraud shows:
- 72 per cent of APP fraud cases originated from online sources. These cases tend to be lower-value scams, such as purchase scams, and so account for 32 per cent of total losses.
- 16 per cent of cases originated in telecommunications and these tend to include higher value cases, such as impersonation fraud, and so account for 35 per cent of total losses.
