A total of £571.7m was stolen by fraudsters in the UK in H1 2024, according to data released by the country’s trade body, UK Finance, at a time of heightened industry and regulatory focus on this area.
The losses were divided between unauthorised fraud losses and authorised push payment (APP) fraud, the latter of which is the subject of freshly implemented regulations. Regarding unauthorised transactions, losses were divided between payment cards, remote banking and cheques.
This totalled over £358m spread across 1.5 million cases during H1, a year-over-year increase of 5% in terms of money lost and an increase of 19% in terms of cases. Card not present cases rose 26%, whilst card ID theft cases dropped by 15% with losses down 12% to £29.3m.
Despite the overall increase in losses, there has also been an increase in authorised prevention of 13%, up to £710.9m. UK Finance found that customers have been fully refunded in over 98% of fraud cases, whilst the above-mentioned threat of APP fraud has been addressed by the Payment Systems Regulator (PSR) – though we’ll discuss this more below.
Ben Donaldson, Managing Director of Economic Crime at UK Finance, said: “Fraud continues to pose a major threat in this country with over £570m 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.”
New rules, new powers, same fraud
Turning now to the fraudulent elephant in the UK’s financial room – APP fraud, which UK finance has attributed £213.7m in losses towards. To say this topic has been extensively and at times fiercely debated would be a huge understatement.
However, it is important to note that UK Finance’s data shows an 11% drop from H1 2023, with losses divided between £165.5m in personal losses and £47.2m in business losses. The total number of cases also dropped 16% to 97,344 across all categories of APP fraud.
Purchase scams were down 11%, romance scams were down 7% and investment scams down 29%. Fraud cases where criminals impersonate a bank or police to convince people to send money to a safe account fell 32%, with the amount lost dropping 26%.
Regardless of this decline, the £213.7m in losses is still worrying for consumers, businesses, regulators and the government. HM Treasury recently highlighted romance scams and purchase scams when granting new fraud prevention powers for banks, and then of course there are the PSR fraud reimbursement rules.
Coming into effect on 7 October, the PSR rules require payments firms to reimburse victims of APP fraud up to £85,000. The cap was initially going to be £415,000, but was dropped after a backlash from and consultation with the industry – though The Payments Association, the payments industry trade body, argues it should be dropped even further to £30,000.
According to UK Finance, £126.7m in APP losses were returned to victims in H1 2024, 59% of the total loss. The new PSR rules will likely drive this figure up, though the cap will mean it will never reach 100%, whilst HM Treasury will hope its new powers for banks will help cut down the total losses in general so that reimbursement will never be needed.
Donaldson continued: “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.”
Social media’s social responsibility?
Fraud is not going anywhere, sadly, and neither will the debate around how to prevent it, who should reimburse victims, and how much they should reimburse. Much of the debate around responsibility has revolved around social media and online platforms.
Lloyds, TSB, Barclays and Revolut are just some of the major UK financial institutions to cite the role social media platforms play in perpetrating fraud. This is due to many scams and fraudulent activities being carried out on social media, with platforms used by fraudsters to advertise false investment opportunities or reach out to prospective romance scam victims.
Earlier this month, Revolut put out a statement calling on Meta to share responsibility for fraud reimbursement. The Facebook and Instagram parent company has been taking some measures, it should be noted, such as expanding a data sharing pilot with NatWest and Metro Bank – Revolut seems to think more should be done though.
Revolut’s Head of Financial Crime, Woody Malouf, said: “These platforms share no responsibility in reimbursing victims, and so they have no incentive to do anything about it. A commitment to data sharing, albeit needed, simply isn’t good enough.
“We are confident in the steps the UK government is taking to tackle fraud, but what is urgently needed now is for Meta and other social media companies to commit to supporting victims of fraud in the same way financial institutions do. Their silence on this issue says it all.
“We are prepared to do our part to keep customers safe, and so should they. We should be the last line of defence, not the only line of defence.”
Whilst Revolut’s comments have not exactly aged well in the context of a recent BBC Panorama investigation into the company’s own fraud prevention credentials, UK Finance data does suggest that social media is a valuable tool in fraudster’s arsenals.
The trade body found that 72% of APP fraud cases originated from online sources, largely lower value scams such as purchase scams, accounting for 32% of losses. A further 16% of cases came from telecommunications, largely higher value cases like impersonation fraud, which makes up 35% of total losses.
Lastly, though not mentioned by UK Finance, advancements in technology are an important topic to discuss in the context of fraud. Criminals are making good use of Artificial Intelligence (AI), particularly deepfake images and voices, to carry out fraud.
Whilst banks and other institutions are being granted new powers by the government, and are now required to reimburse the majority of fraud victims, these companies also need to ensure they are at the top of their technological game.
“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,” said Dan Holmes, Director of Banking Fraud, Identity and Market Strategy at financial crime prevention firm Feedzai.
“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.”
