The impact of fraud and scams is being felt just as much by US consumers as it is in the UK, and is proving a headache for regulators and financial institutions in both.
Data released by Featurespace, a financial crime prevention firm soon-to-be-acquired by Visa, found that 30% of US consumers reported financial losses from scans within their households.
VIctims lost an average of $545, with 27% losing between $1,000 and £9,999 and 12% over $10,000. The figures come just a week after UK Finance, the UK’s financial services trade body, reported losses to fraud totalling £571.7m ($739.2m) in H1 2024.
Featurespace’s research shows some differing trends in the UK. The most common type of US fraud was ID theft, affecting 24% of fraud victims, whilst in the UK ID theft losses dropped 15% with losses down 12% to £29.3m.
US consumers were also targeted with gift card scams, affecting 19% of victims, and e-commerce scams like fake websites and fraudulent listings at 16% and debt collection scams at 15%.
An interesting comparison to make is the extent of romance scams, which have been highlighted as a major issue in both countries. Featurespace found that romance scams had the biggest financial impact in the US, with average losses of $2,000. These scams were also noted as longer in duration, with victims making an average of 3.6 payments.
Over in Britain, romance scams were down 7% in H1 according to UK Finance data, but have still been highlighted as an area of concern by HM Treasury. When granting new anti-fraud powers to banks earlier this month the government financial department asserted that romance scams, along with purchase scams, dominate UK fraud cases.
The US and UK are two of the world’s wealthiest countries, ranked first and sixth by GDP respectively. As a result consumers in both nations are regular targets for fraudsters, something which has been noted by financial institutions and regulators on either side of the Atlantic.
Martina King, CEO at Featurespace, comments: “With millions of US consumers hit with scams over the last few years, financial institutions must continue to enhance consumer protections to fight back against the rising threat of fraud and financial crime.
“Tackling scams should be focused on prevention rather than cure: using technology to identify and prevent scams in real-time by offering increased security measures.
“Using adaptive behavioural data and artificial intelligence allows financial institutions to protect their clients – stopping fraudulent transactions in milliseconds – without impacting the customer experience or stopping authentic transactions from taking place.”
Recent regulatory efforts against fraud in the US have included a Federal Trade Commission (FTC) report to Congress in which the authority highlighted that older US citizens lost $1.9bn to fraud in 2023. The authority has embarked on enforcement actions, outreach and education efforts, and is calling on Congress to approve new rules to make it more agile when seeking money back for consumers.
This latter issue of reimbursement has become the defining topic in UK fraud prevention lately. The Payment Systems Regulator (PSR) introduced new rules earlier this month requiring payments firms to split the costs of reimbursing fraud victims to a cap of £85,000, though some stakeholders such as The Payments Association trade body argue it should be capped further to £30,000.
