Amount stolen through fraud falls in 2023 as banks’ prevention efforts pay off

There was a 4% decrease in the amount stolen through authorised and unauthorised fraudulent activity in the UK in 2023, while the number of confirmed cases also declined when compared to 2022, UK Finance has reported.

Criminals stole £1.17 billion through fraud last year, down 4% on 2022, while confirmed cases were 1% lower, at 2.97 million.

The UK Finance Annual Fraud Report revealed that authorised push payment (APP) fraud losses were £459.7 million, down 5% on 2022, comprising £376.4 million of personal losses and £83.3 million of business losses.

However, the total number of APP cases climbed 12% to 232,429, driven mainly by purchase scams, where people pay for goods that never materialise and which now account for 67% of the total number of APP cases.

UK Finance reported that the number of romance scams, where victims are “tricked” into believing they are in a relationship, reached its highest highs in terms of losses and cases, which were up by 17% to £36.5 million, and 14% respectively.

The latest figures showed that 76% of APP fraud started online in 2023, while telecommunications networks are the source of 16% of APP fraud, although these tend to be higher value cases.

Of the amount lost to APP fraud, £287.3 million was returned to victims in 2023, or 62% of the total loss, which is up from 59% in 2022.

UK Finance highlighted in its report, produced in partnership with Feedzai, that banks prevented a further £1.25 billion of unauthorised fraud through advanced security systems, which is equivalent to 64p in every £1 of attempted fraud.

On 7 October, the Payment Systems Regulator’s new APP fraud reimbursement requirement is due to come into force, which sets the maximum level of reimbursement per claim will be set at £415,000.

Ben Donaldson, managing director of economic crime at UK Finance, said: “The financial services industry remains at the forefront of efforts to protect customers, prevent fraud and support those who fall victim.

“With reimbursement rules set to change, we risk even more money getting into criminal hands, unless the technology and telecommunication sectors take proper action to stop the fraud that proliferates on their platforms and networks.”

He said that while UK Finance is “supportive of reimbursement”, it does “have some concerns about the new [reimbursement] rules”.

Donaldson warned of the “unintended consequences” of the reimbursement requirement ahead of its implementation later this year, “particularly where a likely increase in complicit fraud is concerned”.

He confirmed that UK Finance would like to see the reimbursement cap reduced to £85,000, adding that it “would be a more sensible figure”.

The annual report revealed that losses as a result of unauthorised transactions across payment cards, remote banking and cheques totalled £708.7 million in 2023, down 3% on the previous year, while the total number of recorded cases was 2% lower, at 2.7 million.

UK Finance attributed the overall fall in payment card fraud losses to the rollout of Strong Customer Authentication over the past two years.

Industry reaction

“People are being bombarded with a barrage of fake texts, calls, social media adverts, and emails — with the scams becoming increasingly common, complex and convincing,” said Alastair Douglas, chief executive officer of TotallyMoney.

“We need to see a combined effort from banks, telecoms and technology companies, the police and government, to crack down on scammers and protect the public.”

Andrew Foulds, director, global clearing solutions, product management, EMEA at Fiserv, said that while the 4% decline in fraud losses is a positive sign for consumers and financial institutions, more can be done to “stay ahead of fraudsters”.

“With real-time payments on the rise, there is a pressing need to intercept fraud and money laundering before funds are settled,” Foulds added.

“Although there is no silver bullet solution for financial institutions to eliminate fraud, a well-considered AML and fraud strategy that encompass activity across the payment chain is key. Collaboration and co-operation must be part of the solution, alongside real-time fraud detection processes that utilize capabilities like machine learning.”

Click here to download Open Banking Expo’s new report, in association with Bottomline, ‘Rising to the fraud challenge 2024’.