Fraud losses increase by 30% in 2021

UK Finance has called for government-coordinated action as it reports a 30 per cent increase in fraud losses during the first half of the year.

In total, from January to June, £753.9 million was stolen through fraud.

In its latest fraud report, the trade association revealed that while in previous years the largest fraud losses have been unauthorised frauds mainly committed using payment cards, in 2021 criminals focused their activity on authorised push payment (APP) fraud.

In APP fraud a customer is tricked into authorising a payment to an account controlled by a criminal. In these scams the criminal’s activity takes place outside the banking system. Using tactics such as scam phone calls, text messages and emails, as well as fake websites and social media posts, criminals seek to trick people into handing over personal details and passwords.

Overall, there was a 71 per cent increase in APP fraud during the first six months of 2021 and for the first time, the amount of money stolen through APP fraud overtook card fraud losses.
£355.3 million was lost to this type of fraud in the first half of the year.

Unauthorised fraud losses hit £398.6 million, an increase of seven per cent.

But the banking and finance industry prevented a further £736 million of attempted unauthorised fraud which means that £6.49 in every £10 of attempted unauthorised fraud was blocked.

The organisation, which represents around 300 UK financial institutions, revealed that criminals are now targeting people as young as 14 via social media sites to become money mules where their bank account is used to launder stolen money.

It also said that intelligence shows a notable increase in the use of cryptocurrency wallets being used to take stolen money outside of the banking system quickly.

UK Finance warned that fraud is now at a level where it poses “a national security threat” and needs to be dealt with via government-led action across all sectors, including ensuring that all economic crime is brought within the scope of the Online Safety Bill.

“Our latest figures show the sheer scale of fraud taking place in the UK and highlight clearly the need for coordinated action to address this threat,” said Katy Worobec, managing director of economic crime at UK Finance. “The banking and finance industry invests billions in advanced systems to try and stop fraud happening in the first place, but criminals are exploiting weaknesses outside of banks’ control to trick customers into making payments directly to them.”

Worobec added: “This is why we are calling for coordinated action and increased efforts from government and other sectors to tackle what is now a national security threat.”

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