Bank transfer scams cost victims £479m in 2020, reveals UK Finance

Less than half of the total value of losses to bank transfer scams last year was returned to victims by banks and other finance providers, industry figures show.

Some £479 million was lost in 2020 to scams where people were tricked into making bank transfers to fraudsters – also known as authorised push payment (APP) fraud, according to the data from UK Finance.

This total was up by 5% compared with the previous year.

Banks and other finance providers were able to return £206.9 million of the losses from APP fraud to victims, which UK Finance said was about three-quarters more than the sum returned in 2019.

UK Finance said it has seen criminals openly advertising fraud and scam services for sale online, including template phishing websites and custom-built scam apps which replicate real banking apps.

In 2020, criminals turned to online and technology-enabled scams to exploit people’s fears about the Covid-19 pandemic, our latest Fraud the Facts report reveals.

Read more here > https://t.co/v7cjca6r2U pic.twitter.com/hAyDt4Y8yZ

— UK Finance (@UKFtweets) March 25, 2021

It said it “cannot be right” that online firms are effectively profiting from fraud – adding the Online Safety Bill must ensure online platforms step up efforts to protect customers.

Katy Worobec, managing director of economic crime at UK Finance, said: “The banking industry has worked hard throughout the pandemic to protect customers from fraud and to go after the criminals behind it, with over £1.6 billion of fraud stopped in 2020.

“However, we are seeing a worrying rise in online and technology-enabled scams that evade banks’ advanced security systems and use digital platforms to target victims directly, tricking them into giving away their money or information.

“We urge the Government to use the upcoming Online Safety Bill to ensure online platforms take action to protect customers by taking down scam adverts on search engines, removing fake profiles on online dating websites and tackling fraudulent content on social media.

“It cannot be right that online firms are effectively profiting from fraud, while society as a whole pays the price.”

The number of APP cases recorded increased by 22% last year to nearly 150,000.

Investment scams were the fastest-rising type of APP scam, totalling £135.1 million. People can lose particularly large sums to investment scams, and may be tempted due to the low returns available generally during the coronavirus crisis.

Purchase scams, in which the victim pays in advance for goods or services that are never received, remained the most common form of APP fraud, accounting for more than half (52%) of cases.

Many banks have signed up to a voluntary code to reimburse victims of APP fraud, in cases where neither they nor their bank is to blame.

However, there have been concerns that some banks are interpreting the code differently to others and may be expecting customers to have sophisticated knowledge about scams in some cases.

UK Finance said nearly £7 in every £10 of attempted unauthorised fraud was blocked by the banking industry last year. Unauthorised fraud happens when the criminal carries out the transaction themselves, without the account holder’s knowledge.

Unauthorised fraud fell by 5% to £783.8 million in 2020, with the banking industry stopping £1.6 billion of losses.

Contactless card fraud losses meanwhile fell by 22% to £16 million, marking the first annual fall since this data started being collected in 2013.

UK Finance said the fall is likely to be related to lockdown restrictions limiting opportunities for criminals to commit contactless fraud using lost and stolen cards.

Cheque fraud losses plunged by 77% to £12.3 million, likely driven by the continued fall in the use of cheques, which has been accelerated by the impact of lockdown restrictions.

TSB has set itself apart from the industry generally by operating its own fraud refund guarantee since April 2019.

Ashley Hart, head of fraud, TSB, said: “Our unique approach has seen 99% of fraud cases refunded under the fraud refund guarantee, which has proved vital to our customers during an already difficult year.

“Throughout the pandemic, we have seen a surge in scams through social media and online platforms. It’s clear these sectors could do much more to swiftly remove online scams and collaborate with banks and regulators to better protect the UK from fraud.”

Gareth Shaw, head of money at Which?, said: “A staggering amount of money has been lost to a growing number of scams since the start of the pandemic. The Government now has the perfect opportunity to force online platforms to do more to protect their users from fraudulent content through its proposed Online Safety Bill.

“Meanwhile, banks are failing to consistently follow the voluntary code that was put in place to protect customers from bank transfer scams. The majority of victims are refused reimbursement, with some banks all too often unfairly pinning the blame for these sophisticated scams solely on their customers. It’s time for these protections to be made mandatory and for prevention and reimbursement rates to be published on a firm-by-firm basis.”