Purchase scams and romance frauds pushed up the number of cases where people were tricked into losing money to fraudsters last year, according to a trade association.
A record amount was lost to purchase scams last year, where people were tricked into paying for goods that never materialised, UK Finance said.
It also warned that people looking to attend events such as the Olympics and Taylor Swift concerts could be targeted by scammers this year.
Every year we see a cycle of scams changing throughout the year— Ben Donaldson, UK Finance
Some 156,000 purchase scam cases were recorded, with a total loss of £85.9 million, marking the highest loss and case total recorded by the organisation, which represents the banking and finance industry.
Purchase scams account for around two-thirds (67%) of the total number of authorised push payment (APP) cases – where someone is tricked into transferring money to a fraudster.
With a purchase scam, the victim pays in advance for goods or services that are never received, often ordered on an online platform such as an auction website or social media.
Lloyds Bank recently estimated that, based on analysis of its own scam reports, more than £1 million could already have been lost in the UK to fraudsters pretending to offer Taylor Swift concert tickets.
Asked about events that scammers could take advantage of, Ben Donaldson, managing director, economic crime at UK Finance told journalists: “Every year we see a cycle of scams changing throughout the year…
“I think the Olympics and Taylor Swift are probably the two biggest ones for this year.”
One area of APP fraud to watch in the coming year is the evolution of losses across investment scams— UK Finance
UK Finance’s report said: “It is perhaps assumed that purchase scams only involve high volumes of lower value ‘too good to be true’ scams.”
But UK Finance said that data from members of a voluntary reimbursement code indicates “around 9% of cases and two-thirds of losses involving purchases with a value in excess of £1,000”.
The total number of APP cases jumped by 12% annually last year to 232,429.
APP fraud losses totalled £459.7 million, down by 5% compared with the previous year. This was made up of £376.4 million of personal losses and £83.3 million of business losses.
UK Finance’s APP scam records go back to 2020.
Romance scams, where victims are tricked into believing they are in a relationship, also reached a high, with £36.5 million lost this way, according to UK Finance.
However, APP scams losses where people were tricked by criminals impersonating the bank or the police to convince someone to transfer money to a “safe account” fell.
UK Finance said there has been significant investment made in warning consumers that a bank will never ask someone to transfer money in this way.
Some 62% or £287.3 million of APP fraud losses was returned to victims in 2023, slightly up from 59% in 2022.
The report added: “One area of APP fraud to watch in the coming year is the evolution of losses across investment scams.”
It said that while losses through investment scams had fallen over the past two years, this may reflect cost-of-living challenges.
The report continued: “As these pressures are expected to dissipate in 2024 with rising real incomes, the risk of losses through investment scams could increase.”
I think there is a good chance that we'll see an increase in particular types of fraud— Ben Donaldson, UK Finance
Increases in cryptocurrency prices could be exploited by criminals to trick potential victims with the promise to big returns, UK Finance warned.
New rules will come into force in October, making reimbursement for APP scams mandatory. At present, many banks have signed up to a voluntary reimbursement code.
Writing in the report, Mr Donaldson said: “Reimbursement will only ever be part of the solution as victims still suffer and the criminals still get the stolen money.
“A cross-sector approach is crucial, as is the sharing of actionable intelligence as well as the delivery of pro-active disruptive measures and operations.”
Asked about the potential impacts of mandatory reimbursement for APP scams and any unintended consequences, Mr Donaldson highlighted concerns that criminals will find ways to exploit the situation.
He said: “The concept is right but the detail of it is the thing that’s really going to make a difference in terms of keeping consumers safe and making sure this works effectively.”
He added: “I think there is a good chance that we’ll see an increase in particular types of fraud, I would be surprised if we don’t see criminals exploiting this an an opportunity to carry out some complicit fraud.”
Mr Donaldson said that, for example: “It may make it easier for criminals to manipulate some victims because you’ve got a pretty compelling point there that, you know, you can go for this investment, you’re either going to double or triple your money, or we’re going to give you your money back.
“There’s probably a kind of category in between where it gives criminals potentially an opportunity to use yet another persuasive tactic.”
We see first-hand the importance of giving innocent victims their money back – and welcome new rules that will ensure all bank customers receive a higher standard of protection against the devastating impact of fraud— Matt Hepburn, TSB
In total, criminals stole £1.17 billion through unauthorised and authorised fraud in 2023, a 4% decrease compared with 2022.
Banks prevented a further £1.25 billion of unauthorised fraud through advanced security systems.
Just over three-quarters (76%) of APP fraud cases started online and 16% started through telecommunications networks, UK Finance said.
Losses due to unauthorised transactions across payment cards, remote banking and cheques were £708.7 million in 2023, down by 3% compared with 2022.
The total number of recorded cases was 2.7 million, down by 2%.
The roll-out of strong customer authentication (SCA), which verifies a customer’s identity, has helped to reduce fraud, UK Finance said.
Card identity theft increased in 2023, with losses up by 53% to reach £79.1 million.
Where criminals are unable to socially engineer their victims into making authorised payments, they use the personal information gathered as well as stolen card details to either take over existing accounts or apply for new credit cards, UK Finance said.
The figures also showed that £41.5 million-worth of contactless card fraud losses were recorded last year, up by nearly a fifth (19%) compared with 2022.
The increase was, however, smaller than an annual rise of over 80% in 2022.
Contactless card losses had jumped in 2022 as spending limits were increased during the coronavirus pandemic and there was a significant expansion in acceptance, the report said.
It added: “Recent rises in contactless fraud have been increasing at a much slower pace than the expansion in transactions volumes and values.”
Matt Hepburn, fraud spokesperson at TSB, which operates its own fraud refund guarantee, said: “We see first-hand the importance of giving innocent victims their money back – and welcome new rules that will ensure all bank customers receive a higher standard of protection against the devastating impact of fraud.”
Santander UK’s head of fraud risk management Chris Ainsley said: “While the industry has made significant progress protecting customers and preventing fraud, criminals last year walked away with over £1.1 billion.”
He added: “We owe it to consumers to stamp out this harrowing crime, and the only way we’ll do that is if we can prevent it happening at source, and to do that, we desperately need cross-industry collaboration – including banks, tech companies, telecoms and government – to work together to create meaningful change.”
Stop Scams UK chief executive Mark Tierney also urged further collaborative efforts, saying: “It’s only by working together that we can help protect consumers and curb the misery inflicted upon ordinary people, whose lives can often be devastated when they unwittingly come into contact with a scam.”
