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Scams cost victims over £1.3bn last year

·Finance Reporter, Yahoo Finance UK
·4-min read
scams EMBARGOED TO 0001 MONDAY MARCH 14 File photo dated 01/12/14 of a woman using a laptop to browse the Amazon website. Online shoppers may find they need to confirm their identity more often when making payments from Monday, as changes to combat fraud come into force. Issue date: Monday March 14, 2022.
Around £215m was lost to impersonation scams, UK Finance figures show. Photo: PA

A total of over £1.3bn was stolen through fraud and scams in 2021, according to UK Finance.

Unauthorised and fraudulent losses across payment cards, remote banking and cheques totalled £730.4m. In these cases, the account holder themselves does not provide authorisation and the transaction is carried out by a criminal using the victim’s card details without their knowledge.

Authorised push payment (APP) fraud cost victims £583.2m, with nearly 40% of APP losses due to impersonation scams (where the fraudster impersonates someone to trick you into handing over information). There were 195,996 incidents of APP scams last year.

Read more: Five new scams to watch out for and how to protect yourself

However, victims only managed to recover £271.2m as banks will not always reimburse clients, depending on the type of scam.

In 2021, criminals impersonated a range of organisations such as the NHS, banks and government departments via phone calls, text messages, emails, fake websites and social media posts to trick people into handing over their personal and financial information. Around £215m was lost to impersonation scams, and this was the largest category of APP losses, UK Finance said.

Read more: Energy scams jump 10% as fraudsters exploit cost of living crisis

The second largest category of APP losses was investment scams, £171.7m was lost through these.

The most common type of scam is a purchase scam: where customers are tricked into paying for goods that never arrive. UK Finance reported 99,733 cases of these, accounting for 51% of all scam. The total losses from these were £64.1m.

Katy Worobec, managing director of Economic Crime at UK Finance, said: “Fraud has a devastating impact on victims and the money stolen funds serious organised crime, as well as imposing significant costs on the wider economy.

“Unauthorised fraud losses fell last year, but this type of criminal activity remains a major problem. Through the introduction of new measures such as strong customer authentication, coupled with continued investment in technology, the banking and finance industry prevents significant amounts of fraud from taking place.”

The banking and finance industry prevented a further £1.4bn of unauthorised fraud from getting into the hands of criminals.

Read more: One in four young adults falling victim to shopping scams on social media

A total of £271.2m of losses were returned to victims of APP scams, accounting for 47% of losses.

Worobec added: “Authorised fraud losses rose again this year as criminals targeted people through a variety of sophisticated scams, with much of the criminal activity taking place outside the banking sector, often involving online and technology platforms. This is why we continue to call for other sectors to play a greater role in helping protect customers from the scourge of fraud.

UK Finance is urging customers to follow the advice from its Take Five to Stop Fraud campaign:

· Stop: Taking a moment to stop and think before parting with your money or information could keep you safe.

· Challenge: Could it be fake? It's ok to reject, refuse or ignore any requests. Only criminals will try to rush or panic you.

· Protect: Contact your bank immediately if you think you’ve fallen for a scam and report it to Action Fraud.

Emma Lovell, chief executive, Lending Standards Board (LSB), said: "No-one should be out of pocket because of criminal activity. Evidence shows scams impact victims’ mental health, leaving long-lasting feelings of guilt and shame. Reimbursement alone cannot reverse this damage; nor does it reverse the fact that the proceeds of scams often fund organised and other serious crime.

"Relying solely on reimbursement diverts focus from preventing harm and stopping scams in their tracks.

"The voluntary Contingent Reimbursement Model Code (CRM Code) is the only set of protections that require signatory payment service providers to detect APP scams, prevent them from happening and respond to them when they are successful."

Myron Jobson, senior personal finance analyst at Interactive Investor, said: “It appears to be a case of one step forward, two steps back. While unauthorised fraud losses fell last year, with the banking and financial industry preventing £1.4bn of unauthorised fraud from getting into the hands of crooks, authorised fraud losses rose – mainly due to an increase in losses from impersonation scams

“Fraudsters wreaked havoc during the pandemic by taking advantage of consumers' fears and shrouding their nefarious schemes among correspondence by the government and legitimate organisations relating to coronavirus measures. The worry is history could repeat itself amid the biggest fall in living standards in generations.

“We often overestimate our ability to spot a financial scam when, in reality, even those who consider themselves financially savvy aren’t immune to increasingly sophisticated scams.

“We all need to remain on our guard against scams. In addition to the basics, which include not sharing your login credentials and ensuring that online transactions are made from secure and trusted websites, be mindful of who you disclose personal information to and remember that if a proposition seems too good to be true then it probably is.”

Watch: How to avoid Cyber Criminals