Bank customers lose half a billion pounds to scams in 2018

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Bank customers lose half a billion pounds to scams in 2018
« on: October 22, 2018, 17:37:14 »

The latest data from UK Finance reveal that the most common type of scams in UK are purchase scams, where a victim believes they are paying for a legitimate service or item, which never materialises.

The total amount stolen in purchase scams was £19.4m across 21,483 cases. Investment fraud resulted in £20.9m of losses, while 571 victims were tricked by romance scams — where people are conned into thinking they are in a relationship with the perpetrator — for an average loss of £9,282.

The data is from UK Finance, a trade body, which showed that scammers stole more than £500m from UK bank customers in the first half of 2018.

A total of £145m was lost through authorised push payment (APP) scams, where people were tricked into authorising a payment to another account. The remaining £358m was lost due to unauthorised fraud, where the transaction is carried out by a third party and was not authorised by the account holder.

How do the figures break down?

Purchase scams accounted for almost two-thirds of reported cases in the data. In this fraud, the victim pays in advance for a product or service, such as a car, electronic goods or a holiday rental, which is never received or does not exist. It often takes place online, through auction websites or social media.

There were 3,866 cases of impersonation scams in the first six months of this year. Here, the criminal purports to be from the police, bank and other organisations and tricks the victim into transferring money, often claiming there has been fraud on the account. The nature of these scams means the victim is often persuaded to transfer a significant sum, with an average loss in a police and bank impersonation scam of £11,402 and in other impersonation scams of £7,504.

Then there is unauthorised fraud, in which the account holder does not provide authorisation for the payment to proceed and the transaction is carried out by a third party. Losses due to unauthorised transactions on payment cards, remote banking and cheques actually fell by 2 per cent year-on-year to £358m.

Victims of unauthorised fraud are usually refunded by their banks, but most victims of APP fraud do not have legal protection and so do not get their money back. This is because current legislation means they are liable for any losses incurred if they authorise a payment themselves.

What can you do to protect yourself?

Tony Blake, head of fraud prevention in the dedicated card and payment crime unit at the City of London Police, urges customers to follow the advice of the Take Five to Stop Fraud campaign. This includes only giving out your personal or financial details to a service that you have given your consent to, that you trust and that you are expecting to be contacted by. Mr Blake also reminds people not to click on a link automatically in an unexpected email or text and always to question uninvited approaches in case they are fraudulent. Instead, contact the company directly, using a known email or phone number.

What are the banks doing about it?

The finance industry is working with consumer groups and the regulator to develop an industry code clarifying the circumstances in which the victims of authorised push payment scams will be reimbursed by their payments providers. Among other measures, the industry is also implementing new standards to ensure those who have fallen victim to fraud or scams get the help they need.

Is this enough?

UK Finance says financial institutions prevented two-thirds of unauthorised fraud in the first half of 2018 but Gareth Shaw, money expert at the consumer group Which?, said banks’ efforts had been “woefully insufficient”.

“They have not done enough to protect their customers, who continue to lose life-changing sums of money to ever-more sophisticated crooks,” he said.

“The Payment Systems Regulator has rightly committed to introducing a reimbursement scheme for victims. It’s about time that banks step up and properly compensate customers who have lost money through no fault of their own.