Scam warning as record amount lost to fraudsters in 2023 – the signs to look for | Personal Finance | Finance

A woman using a laptop and a payment card

Purchase scams and romance frauds pushed up the number of cases where people were tricked into losing money to fraudsters last year, according to UK Finance (Tim Goode/PA) (Image: PA Archive/PA Images)

There has been a surge in defrauding cases, as purchase scams and romance frauds have led to increased instances of people losing money at the hands of scam artists last year, according to a trade association. UK Finance revealed that there was a record amount lost to purchase scams, unveiling a scenario where individuals were conned into splashing out on goods that never arrived.

The association also issued a stern warning to those planning to attend major events like the Olympics or Taylor Swift concerts this year, as they could fall victim to these swindlers. A hefty total of 156,000 purchase scam cases were logged, resulting in a combined loss of £85.9 million that marks it as the highest loss and case total recorded by the group that speaks for the banking and finance sector.

Around two-thirds (67 percent) of all authorised push payment (APP) cases instances where a person is tricked into transferring funds to a fraudster, involved purchase scams. Buyers end up paying ahead for goods or services via this type of scam, often conducted via online platforms such as auction websites or social media, but never see the products delivered.

Lloyds Bank recently calculated that based on its own scam reports, over a whopping £1 million could already have been relinquished to conmen posing as pressing offers of Taylor Swift concert tickets in the UK. Speaking about potential situations scammers could capitalise on, Ben Donaldson, Managing Director of Economic Crime at UK Finance, warned journalists that “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.”

UK Finance’s report suggested: “It is perhaps assumed that purchase scams only involve high volumes of lower value ‘too good to be true’ scams.”

However, UK Finance disclosed that data from members of a voluntary reimbursement model shows “around nine percent of cases and two-thirds of losses involving purchases with a value in excess of £1,000”.

Last year saw a 12 percent annual rise in the total number of APP cases, reaching an astonishing record of 232,429.

Losses from APP fraud ultimately totalled £459.7 million, dropping by five percent compared to the previous year. This figure encompasses £376.4 million of personal losses and £83.3 million of business losses.

Records of APP scam kept by UK Finance date back to 2020.

According to UK Finance, romance scams, where unsuspecting victims are tricked into believing they are in a romantic relationship, also reached a peak, leading to losses of a colossal £36.5 million.

Meanwhile, losses where individuals were duped by criminals impersonating bank or police officials, convincing them to transfer money to a so-called “safe account”, witnessed a decrease.

There has been a substantial investment made in alerting consumers to the fact that a bank will never request someone to transfer money in such a way, according to UK Finance.

Remarkably, 62 percent or £287.3 million of APP fraud losses was paid back to victims last year, a slight increase from the 59 percent reimbursed in 2022.

However, the report forewarned: “One area of APP fraud to watch in the coming year is the evolution of losses across investment scams.”

The report from UK Finance has highlighted a concerning trend: despite a decrease in losses through investment scams over the past two years, this may be due to the current cost-of-living challenges. The report warns, “As these pressures are expected to dissipate in 2024 with rising real incomes, the risk of losses through investment scams could increase.”

Furthermore, UK Finance cautions that surges in cryptocurrency values could become a fertile ground for fraudsters promising massive returns.

In a significant policy shift, new regulations set to take effect in October will make reimbursement for Authorised Push Payment (APP) scams compulsory. Currently, many banks adhere to a voluntary code for reimbursing victims.

UK Finance’s chief executive, David Postings, writing in the report, emphasised that while reimbursement is crucial, it isn’t a complete fix: “Reimbursement will only ever be part of the solution as victims still suffer and the criminals still get the stolen money.”

He advocates for a collaborative approach across sectors, sharing actionable intelligence, and implementing proactive disruption measures and operations.

When questioned about the potential repercussions of mandatory reimbursement for APP scams and possible unintended consequences, Mr Postings expressed his apprehensions. He acknowledged the principle behind the concept but stressed the importance of the details: “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 remarked: “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 explained: “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.”

He also noted: “There’s probably a kind of category in between where it gives criminals potentially an opportunity to use yet another persuasive tactic.”

In 2023, criminals made off with £1.17 billion through both unauthorised and authorised fraud, marking a four percent decrease from the previous year.

Banks managed to block a further £1.25 billion in attempted unauthorised fraud thanks to sophisticated security systems.

According to UK Finance, over three-quarters (76 percent) of Authorised Push Payment (APP) fraud cases originated online, while 16 percent began via telecommunications networks.

Losses from unauthorised transactions involving payment cards, remote banking, and cheques totalled £708.7 million in 2023, showing a three percent drop from 2022.

The overall number of reported fraud cases was 2.7 million, a slight reduction of two percent.

The implementation of strong customer authentication (SCA), which confirms a customer’s identity, has been instrumental in curbing fraud levels, as per UK Finance.

However, card identity theft saw a significant rise in 2023, with losses surging by 53 percent to a staggering £79.1 million.

Criminals, unable to trick victims into making authorised payments, turn their attention to using stolen personal information and card details to hijack existing accounts or apply for fresh credit cards, according to UK Finance.

A startling £41.5 million worth of contactless card fraud losses were reported in the previous year, a rise of almost a fifth (19 percent) from 2022’s figures.

Despite this growth, it represents a slower increase than the staggering over 80 percent annual rise experienced in 2022.

Increased spending limits during the Covid-19 pandemic and a broader acceptance led to a drastic surge in contactless card losses in 2022, the report highlights.

Nevertheless, it went on to note: “Recent rises in contactless fraud have been increasing at a much slower pace than the expansion in transactions volumes and values.”

Matt Hepburn, TSB’s fraud spokesperson, who operates its own fraud refund guarantee, stated: “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.”

Chris Ainsley, head of fraud risk management at Santander UK, added: “While the industry has made significant progress protecting customers and preventing fraud, criminals last year walked away with over £1.1 billion.”

He remarked: “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.”

Mark Tierney, the chief executive of Stop Scams UK, also called for united action, stating: “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.”

Check Also

Martin Lewis’s £3k inheritance tax tip over gift allowances | Personal Finance | Finance

Martin Lewis has explained the inheritance tax rules in response to a question about how …