A newly released report by UK Finance outlines the dangerous foothold fraud has in our society.
In 2022, £2,300 was lost every minute to fraudulent activities, totalling £1.2 billion for the year across 2,988,705 confirmed cases. 40% of this loss was attributed to authorised push payment scams, which, while down 17% from 2021, still remain indefensibly high.
What is authorised push payment (APP) fraud?
APP fraud occurs when a criminal deceives a person into transferring money under false pretences. These scams are designed to get around security measures put in place by banks and financial institutions by making the account holder the one who issues the payment.
Fraudsters use leaked data and social engineering to gain the confidence of their target, often employing highly persuasive tactics and pushing a time limit to pressure a person and create urgency. This could be by phoning a person and claiming to be from the fraud department of their bank, an urgent email supposedly from their employer requesting banking information, or it could be a time-sensitive investment opportunity.
According to UK Finance, 78% of APP cases start online, while 18% originate from a phone call. Drilling down into online APP scams, in particular, scams originating via social media make up a staggering 3 in 4 cases.
The true cost of fraud
The current cost of living crisis is forcing many people who may previously have been financially comfortable into making hard decisions or taking risks. Supposedly “easy money” schemes and time-sensitive investment opportunities are tempting solutions at a time when many households are barely scraping by.
Opportunistic fraudsters are using this anxiety and desperation to swindle targets with fake money-making prospects and too-good-to-miss discounts on expensive items. Many even impersonate legitimate government agencies, delivery companies and banks in order to threaten fines and extra fees if money is not paid immediately. This only serves to further push struggling households further into debt and stress.
Alongside the immense amount of money lost each year, fraud victims are also likely to suffer from overwhelming emotional and psychological distress once the fraud becomes apparent, resulting in a mental health toll as well as a financial one.
What are banks doing to help?
While banks have systems in place designed to protect their clients from fraudsters, the high level of fraud reported year-on-year is indicative that the current protections are not good enough.
At CEL Solicitors we have first-hand experience of supporting fraud victims who have been failed by their banks, both at the time of the scam, and then after becoming aware of the crime.
Recent examples include one fraud victim who was allowed to lose £150,000 to a romance scammer, and an 81-year-old woman who lost £21,000 to a fraudster impersonating the fraud team from her bank.
The future of fraud
With the recent progression and adoption of AI technology, banks are theoretically now better positioned to spot fraud trends and aid their clients in protecting their accounts.
Despite this, UK Finance highlight concerns around the uptake of AI by fraudsters themselves.
“it is not just the banks that are utilising AI technology. Fraudsters are already starting to adopt AI to amplify their attack sophistication, with the use of generative AI like ChatGPT and voice cloning poised to make scams ever more convincing.” – UK Finance report
AI-enhanced fraud runs the risk of not only exponentially increasing the potential number of fraud attempts possible at any one time thanks to trainable chatbots, but also increases the fidelity of the scams via deepfakes and AI voice cloning.
“Fraud has a devastating impact on victims and over £1.2 billion was stolen by criminals last year. The banking and finance sector is at the forefront of efforts to tackle this criminal activity. The sector spends billions on detection and prevention and also refunds people who have fallen victim, even if the fraud originated outside the banking system.” – David Postings, Chief Executive at UK Finance
Millions of people are affected by fraud in the UK every year. If you have been the target of scammers and have lost money, help is on hand – even if your bank claim that the loss was your fault. Call the dedicated CEL Solicitors fraud team today on 0808 273 0900 or apply online.
