What Can We Learn from UK Finance’s Latest Fraud Report?
UK Finance recently released its “Fraud – the Facts 2020” report, which details the latest fraud statistics from the UK banking industry, including categorised insights into the overall amount of UK banking fraud losses. This report is very useful when trying to understand the real impact of fraud to consumers, businesses and the overall economy.
Looking at the latest figures, it’s clear that fraudsters continue finding new ways of compromising customers’ details by committing fraud attacks at different spectrums. The UK has always been a target for new fraud trends and now, with number of new banks entering the scene, I don’t see this slowing down anytime soon.
Most of the time, the great work that banks do on a daily basis to prevent fraud is overlooked and goes unnoticed. That’s unfortunate, because they prevented more than £1.8 billion of unauthorised fraud in 2019; however, criminals still managed to defraud victims out of £1.2 billion.
One alarming trend is the significant increase of money mules. Fraudsters are mainly soliciting the help of younger people who might not necessarily understand the consequences or impact of money laundering and this is an area that the whole industry needs to address through better collaboration.
Authorised Push Payment (APP) fraud remains the focus area, as losses reached a staggering £455.8 million in 2019 (29% increase over the previous year) and the total number of cases increased by 45%. Fraudsters are fully aware of the investments banks make into new fraud prevention technology, so their focus is on getting the customer to make the payment for them.
Last May, several UK banks signed up to a new voluntary code, the Contingent Reimbursement Model (CRM), to better protect consumers and to compensate victims of APP fraud.
The latest statistics from UK Finance show that since implementing CRM, more than 50,00 cases totalling £101.1 million have been reviewed and of that, 41% (£41.3 million) was refunded to APP fraud victims. Providing compensation is certainly a step in the right direction, but it also highlights how much more the payments industry needs to do to combat this ever-increasing crime.
One question I always ask myself: what can the industry do to educate consumers and spread awareness around these scams? Customer understanding of the scope of the threat is the only way to fully tackle APP fraud. Banks dedicate a significant amount of resources toward building fraud awareness and communicating best practices and the “do’s and don’ts” through various channels throughout the customer lifecycle.
However, the numbers from UK Finance’s latest fraud report prove that stronger, more effective technology is needed if the financial services industry wants to minimize these threats and protect customers.
Please find the full report here: https://www.ukfinance.org.uk/policy-and-guidance/reports-publications/fraud-facts-2020