Cross-sector cooperation 'needed to tackle APP fraud'

The banking and finance industry stopped over £1.8 billion in fraud in 2019, according to the latest figures from UK Finance, as the industry faces calls for a cross-sector approach to tackle fraud.

As banking customers were urged to be wary of fraudsters capitalising on Coronavirus concerns, the latest data from the industry body found that vigilance in the sector is rising, with losses related to unauthorised fraud falling to £825 million, down two per cent on 2018.

However, losses from authorised push payments (APP) fraud - where customers are tricked into authorising a payment to an account controlled by a criminal - rose to £456 million in 2019, driven in part by criminals abusing online platforms to scam their victims, according to the report. This marked an increase of £354 million on the previous year.

There were a total of 2,792,297 cases of unauthorised financial fraud, up five per cent on the previous year.

Earlier this week, Which? called for fraud protections to be made mandatory, as more than £1 billion was estimated to have been lost to bank transfer scams in just three years.

A total of £41 million in compensation was paid out to victims under the APP voluntary code, which came into effect in May 2019, accounting for 41 per cent of the total losses in these cases.

Compensation rates were higher for fraud cases involving losses of £10,000 or more, and for impersonation scams in which criminals imitate the police, banks or other organisations.

Losses due to unauthorised transactions on payment cards totalled £620.6 million in 2019, down eight per cent compared to 2018.

The industry prevented £999.2 million in attempted unauthorised card fraud, equivalent to £6.17 in every £10 of attempted card fraud being prevented.

Three quarters of card fraud losses (£470.2 million) were due to remote purchase fraud, where stolen card details are used to buy something online, over the phone or via mail order.

The figures come after the National Cyber Security Centre (NCSC) warned that criminals are exploiting fears over the Coronavirus outbreak to target victims posing as genuine organisations including banks, police officers, government, the World Health Organisation, or other health service providers.

These attempts have mostly been made via online fraudulent emails, phone calls, text messages or social media posts often claiming to be able to help customers by providing a safe haven for their money, with investment opportunities or medical guidance.

Katy Worobec, managing director of economic crime at UK Finance, said: “The banking and finance industry is taking action on all fronts to protect its customers from fraud and crack down on the criminal gangs responsible.

“However, criminal gangs are continuing to exploit online platforms to target customers directly and trick them into handing over their money or information, this shows why fraud and other economic crime should be included within the new regulatory framework for online harms, to ensure all sectors play their part in tackling the threat posed by fraud to our society.

“Only by working in partnership with the public sector and other industries can we protect innocent victims and prevent money getting into the hands of criminals,” she added.

Earlier this month, UK Finance announced that a specialist police unit funded by the banking and finance industry prevented £31.2 million of fraud and disrupted 23 organised criminal groups in 2019.

The Dedicated Card and Payment Crime Unit (DCPCU) targets the organised criminal gangs responsible for fraud and is made up of officers from the City of London Police and the Metropolitan Police Service, as well as banking industry fraud investigators and support staff from UK Finance.

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