In Focus Risk
Time for a fresh APProach?
Authorised push payment fraud is becoming a troubling trend, but the industry is working to fight back
Katy Worobec Managing director of economic crime, UK Finance
A total of £503.4m was stolen by criminals through authorised and unauthorised fraud in the first six months of 2018, our new data shows. During the same period, the finance
industry prevented £705.7m of unauthorised fraud, equivalent to £2 in every £3 of attempted unauthorised fraud. Newly-collected data, published for the
first time, reveals that purchase scams were the most prevalent authorised push payment (APP) scam in the first half of the year, accounting for almost two-thirds of reported APP cases, with a total of £19.4m lost. In these scams the victim pays in advance for a product or service, such as a car, electronics or a holiday rental, which is never received or does not exist. It often takes place online, through auction websites or social media. There was a total of 3,866 reported cases
of impersonation scams in the first six months of 2018. In these scams the criminal purports to be from the police, bank and other organisations and tricks the victim into transferring money, often claiming there has been fraud on the account. The nature of these scams means the victim is often persuaded to transfer a significant sum, with an average loss in a police and bank impersonation scam of £11,402 and in other impersonation scams of £7,504. Fraud and scams pose a major threat to
our country. The criminals behind it target their victims indiscriminately and proceeds go on to fund terrorism, people smuggling and drug trafficking, whether or not the individual is refunded. Every part of society must help to stamp this out, especially by stopping the data breaches.
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In these scams the victim pays in advance for a product or service, such as a car, electronics or a holiday rental, which is never received or does not exist
The finance industry is committed to
fighting back, investing millions in security systems and cyber defences to protect customers. We have brought in new standards to ensure scam victims get the help they need from their payments provider; we are supporting law enforcement in disrupting the criminals and freezing stolen money; and we are assisting the government in improving intelligence sharing to extinguish the threat.
APP scams The APP scams data for January to June 2018 shows: l A total of £145.4m was lost due to APP scams, split between personal (£92.9m) and non-personal or business (£52.5m) accounts. l In total there were 34,128 cases of APP scams, split between personal (31,510 cases) and non-personal (2,618 cases) accounts. l Financial providers were able to return a total of £30.9m of the losses in the first half of 2018. In an APP scam, the account holder is duped into authorising a payment to be
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made to another account. If a customer authorises the payment themselves, current legislation means that they have no legal protection to cover them for losses. UK Finance began collating data on APP
scams for the first time last year. In the first half of 2017 there were 19,370 cases of APP scams reported, with £101.2m in losses. However, the data published last month
is not directly comparable with the 2017 figures. At the start of 2018, new industry guidelines were introduced which have improved the identification and reporting of APP scams. Four additional banks also began reporting the data to UK Finance this January. In context, there was a total of over 4.2 billion bank transfers made in 2017.
Unauthorised fraud The unauthorised fraud data on payment cards, remote banking and cheques for January to June 2018 shows: l Combined total losses decreased by 2% year-on-year to £358m. l Losses due to unauthorised transactions on payment cards fell 2% year-on-year to £281.2m. The industry helped prevent £493.5m in attempted unauthorised card fraud. l Losses due to unauthorised remote banking fraud totalled £73.6m, flat compared to 2017. Banks prevented £137.8m of attempted unauthorised remote banking fraud. l Cheque fraud losses fell 41% to £3.2m. This is the lowest half-year total on record. £74.3m of attempted unauthorised cheque fraud was prevented.
October 2018
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