Impersonation fraud losses rocket

The scale of criminal activity which leads to financial loss has been laid bare by UK Finance’s half year fraud update. In total £753.9 million was stolen through fraud, an increase of 30 per cent compared to the same period last year.

As banks improve their security measures, for the first time Authorised Push Payment (APP) fraud has overtaken other methodologies as the leading cause of financial loss, with a 71% increase in H1 2021 against H1 2020.

APP fraud is typically perpetrated by criminals impersonating trusted individuals and organisations in order to trick people into authorising a payment to an account controlled by a criminal. The criminals will send an messages via email, text and increasingly social media either requesting personal data and passwords and/or directing people to pay money to an account purporting to be legitimate. In many cases the emails can be cloned to look identical, or subtle changes such as the inclusion of an additional full stops or hyphens in the name mean they are not immediately picked up, with instructions to redirect funds to a specific account.

Throughout the last 18 months, online retailers, postal delivery services, the NHS and government services have all been victims of impersonation with losses of £129.3 million, an increase of 123% on the same period in 2020.

The report breaks down the type of fraud by methodology with significant increases in “unauthorised” fraud outside of the banking system.

Losses associated with investment scams were £107.7 million (up 95%) as people were often enticed by adverts on social media offering high returns, while the rise of online dating is thought to be linked to the 62% increase in romance scams, with £15.1m of losses. In romance scams

the victim is convinced to make a payment to a person they have only met remotely, often online through social media or dating websites, and with whom they believe they are in a relationship . The ‘relationship’ is often developed over a long period and the individual is convinced to make multiple, generally smaller, payments to the criminal.

Businesses are advised to be wary of  Invoice and Mandate Scams:

“This type of fraud often involves email interception or compromise. It includes criminals targeting consumers posing as conveyancing solicitors, builders and other tradespeople, or targeting businesses posing as a supplier, and claiming that the bank account details have changed.”

Despite a slight decrease in the number of cases and overall value of losses, Invoice and Mandate Scams saw a 17% increase in the value of losses in H1 compared to the 2020 average.

Commenting on the figures Katy Worobec, Managing Director of Economic Crime at UK Finance, said:

“Our latest figures show the sheer scale of fraud taking place in the UK and highlight clearly the need for coordinated action to address this threat. The banking and finance industry invests billions in advanced systems to try and stop fraud happening in the first place, but criminals are exploiting weaknesses outside of banks’ control to trick customers into making payments directly to them.”

“This is why we are calling for coordinated action and increased efforts from government and other sectors to tackle what is now a national security threat.”

“We recently announced that major technology companies are donating $1m of advertising to raise awareness of the Take Five to Stop Fraud campaign on their platforms which is an important step in helping to raise awareness among consumers of the threat.”

“Criminals continue to target customers with a variety of scams, often via online platforms, and it is only through coordinated action that we will be able to really make progress in addressing the problem.”

Last week was “Take 5 Week” promoting the campaign, back by UK Finance, to urge people to Stop, Challenge, Protect when asked for their information or money.

The full report can be read here: https://www.ukfinance.org.uk/system/files/Half-year-fraud-update-2021-FINAL.pdf

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