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£208m lost through bank transfer scams in first half of 2019

By Vicky Shaw, PA Personal Finance Correspondent

A total of £208 million was lost in the first half of 2019 to scams where people were tricked into transferring money directly to a fraudster.

Trade association UK Finance, which released the figures, said financial providers were able to return a total of £39.3 million of the losses.

Within the £208 million total, £147 million was lost from personal accounts and £61 million was from business accounts.

In the first half of 2018, reported losses due to this type of scam, known as authorised push payment (APP) fraud, had totalled £148 million.

There were 57,549 reported APP fraud cases in the first half of 2019 – marking a 69% increase compared with the same period a year earlier.

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But UK Finance said last year’s figures are not directly comparable to the latest half-year total, partly because two additional banks started reporting the data to UK Finance from early 2019.

The latest figures show that investment scams accounted for the biggest chunk of losses among personal banking customers, with £41 million lost to this type of fraud, or more than £12,200 per case.

But purchase scams are the most common type of APP fraud, accounting for around two-thirds of cases where personal banking customers are targeted.

Purchase scams involve people paying up front for goods that they never receive, for example if they are persuaded to buy items on an auction website or through social media using a bank transfer, but their purchases never arrive.

Common scams include the apparent sale of cars, phones or other gadgets advertised at low prices to attract buyers. Fake holiday rentals and concert tickets are also common scams.

Impersonation scams are another tactic used – for example when a fraudster poses as a legitimate business such as a utility firm or a bank.

Warnings have also been issued this week that criminals may use the collapse of Thomas Cook to send holidaymakers fake messages about refunds in an attempt to trick them to hand over their personal details.

When a customer authorises a payment to be made to another account, even if they are tricked into doing so, current legislation means that they have no legal protection to cover them for the losses – because they have authorised their bank to make the transfer.

However, following an outcry from consumer campaigners who have seen people losing their life savings to sophisticated scams, several banks have signed up to a voluntary code to make it easier for victims to get a refund.

The industry voluntary code came into effect on May 28, and firms who have signed up to the code have committed to reimbursing the victims of APP fraud, provided the customer has met the standards expected of them under the code.

UK Finance said intelligence suggests that increased public awareness in the build-up to the introduction of the APP scams voluntary code has resulted in an increase in reporting by customers who fall victim to this type of fraud.

Data on reimbursements made under the code is due to be published in 2020.

Jenny Ross, Which? money editor, said: “The alarming rise of bank transfer fraud, with huge losses and little progress made returning money to victims, shows why the new banking industry code is so important and must deliver results.

“In force since the end of May, it promises better protection for fraud victims, and must lead to a significant increase in the amount of money being reimbursed to victims of these sophisticated scams.

“The banking industry must now urgently ensure that reimbursement for blameless victims continues beyond the end of this year. It is unthinkable that some innocent people could once again be exposed to the threat of losing their life savings to this devastating crime.”

Looking at unauthorised fraud – where money is taken without people’s knowledge or consent – UK Finance said it stopped £2 in every £3 of unauthorised fraud attempts in the first half of this year, equating to £4.5 million worth of fraud being prevented a day.

Customers are legally protected against losses caused by unauthorised fraud, meaning that in the vast majority of cases they are refunded for any losses.

UK Finance said the compromise of personal and financial data remains a significant driver behind fraud losses.

Customer details are being stolen through data breaches at third parties outside the financial sector, while sophisticated “digital skimming” attacks are being used to steal card data when consumers are shopping online.

Some £408 million was stolen in the first half of this year by criminals through unauthorised card, remote banking and cheque fraud.

Katy Worobec, managing director of economic crime at UK Finance, said: “Not only does fraud have a devastating impact on victims, the money stolen goes on to line the pockets of organised criminal gangs involved in drugs, arms and human trafficking.

“The finance industry is constantly investing in advanced security systems to protect customers from this threat, while helping law enforcement to apprehend and disrupt the criminals responsible.

“A new voluntary code was introduced in May that has significantly improved consumer protections from authorised push payment fraud, with signatory firms committed to reimbursing victims providing they have met certain standards.

“However, criminals are continuing to exploit vulnerabilities outside the financial sector to obtain customers’ data that is then used to commit fraud.

“We all have a responsibility to work together, including online retailers and social media companies, to beat the fraudsters and keep customers’ data secure.”