77% of all Authorized Push Payment (APP) fraud originated online- UK Finance Report

October 26, 2023

Fraud continues to be a prevalent issue in the United Kingdom, the latest UK Finance report reveals.  Criminals are unscrupulously utilizing social engineering to target their victims whether it involves impersonating businesses, or fabricating fraudulent investment ads, swindling credit card details, or gaining control over personal accounts. In just six months this year, criminals managed to swipe more than £500 million.

The United Kingdom sees fraud as the prevailing crime, constituting over 40 percent of all criminal activities. The UK government seems to be taking active measures to combat fraud. Last year, the UK government made an investment of £100 million for the purpose of countering fraud as reportedly.

According to the report data, 77% of Authorized App Payment (APP) Fraud during the first half year of 2023 was initiated from digital platforms comprising fake websites and misleading social media posts. 17% of fraud cases originated from telecommunications while 6% of fraud occurs through emails or other sources.

The financial services industry takes a leading role in safeguarding users against fraud by collaborating with other sectors, government bodies, and law enforcement to deter criminal activities and prosecute culprits. Advanced banks’ security systems reportedly prevented the unauthorized fraud of over £651 million.

Unauthorized Fraud

Unauthorized fraud usually involves when someone illicitly acquires another person’s payment details and utilizes the information to execute unapproved transactions. The actual cardholder or owner of payment information detects the unauthorized payment and then raises a conflict.

Criminals execute unauthorized fraud by making unauthorized use of debit, credit, charge, and ATM-only cards. The total fraud losses that occurred by utilizing cards totalled approximately £258.9 million in the first half of 2023, marking a 4 percent decline from the same period in 2022, as per the report.

In this time span, the total amount of money spent using cards increased by 8.7 percent. The ratio of card fraud to card purchase reduced from 7.1 percent per £100 in H1 2022 to 6.5 percent per £100 in H1 2023. Bank and card companies managed to prevent £546 million of card fraud during this time framework. Remote purchase fraud recorded a 12% decline in losses in comparison to the first half (H1) of 2022, reaching £173.8 million.

Lost and stolen card fraud saw a 3% rise and the sum reached £48.3 million. Card not received fraud losses were reduced by 29% compared to H1 2022, dropping to £1.4 million. Counterfeit card losses reached £2.3 million marking a rise of 7%. Card ID theft losses surged by 57% reaching £33.1 million.

UK retail face-to-face loss totalled £38.2 million while UK cash machine fraud saw a total loss of £12.6 million. UK and International card fraud witnessed a decline of 3% to £196.5 million and 8% to £62.5 million respectively. There was a 10% drop in losses from check card fraud reaching a total of £2.9 million.

Remote banking fraud resulted in the loss of £78.9 million. However, internet banking fraud losses were reduced by 4%, amounting to £53.4 million. Losses from telephone banking fraud decreased by 8% to £6.8 million. The figure for mobile banking fraud grew by 17% to reach £18.7 million.

Authorized Push Payment Fraud

Authorized Push Payment Fraud also known as APP fraud involves victims being lured into making instant payments to scammers through social engineering and impersonation. Deceptive and impersonation scams typically entail criminals pretending to be authentic individuals or institutions and reaching out to the victim via phone calls, emails, or text messages.

The criminals advertise investment scams on search engines and social media, while romantic scams are carried out on online dating platforms. The purchase scams are showcased on auction websites. Once the victim has granted approval for the payment, the money gets transferred to the hacker’s account. The criminals then promptly move money to multiple accounts, frequently overseas, from where it can be subsequently withdrawn.

Purchase scams persisted as a predominant type of APP fraud reaching a loss of £40.9 million however Payment Service Providers (PSPs) returned £25.7 million to the victims. Losses from investment scams decreased by 2% dropping to £57.2 million and £33.5 million returned to the victims.

The losses from romance scams increased by 26% compared to H1 2022 amounting to £18.5 million while £11.6 million was returned to the victims. The losses from Advance Fee Scam, the second most common type of APP fraud, witnessed a rise of 6% worth £15.1 million and PSPS reverted £9.6 million to the victims.

Invoice and mandate scam losses totalled £24.8 million with a reduction of 2% while £12.2 million reverted to the victims. CEO fraud, the least common type of APP fraud, resulted in a loss of £6.9 million with a 13% decrease. An amount of £1.3 million was returned to the victims.

Also Read: What is ATO Fraud?