Financial fraud prevention drops in proportion as customers targeted directly

The proportion of financial fraud being prevented has dropped as criminals shift their tactics towards targeting consumers directly, according to a body which fights fraud on behalf of the UK payments industry.

Financial Fraud Action UK (FFA UK) said around £6.40 in every £10 of attempted fraud was stopped in 2016, representing incidents being detected and prevented by banks and card companies.

The proportion of prevented fraud has reduced from £7.01 in every £10 in 2015.

A report from FFA UK said the reduced proportion of prevented fraud is largely due to criminals shifting their methods away from using malware attacks on online banking systems, which bank security processes identified and stopped.

Criminals are moving towards methods less susceptible to direct bank intervention, such as scams directly targeting the customer.

Intelligence suggests criminals are increasingly using phishing emails purporting to be from major online retailers and internet companies which many people are likely to use, FFA UK said.

These emails attempt to trick people into giving away personal or financial details, or into downloading malware.

FFA UK has also heard about evidence of an increase in distraction thefts and card entrapment at ATMs, with fraudsters obtaining both the card and the Pin - enabling them to commit fraud at cash machines and in stores.

Fraud losses at UK cash machines jumped by 32% year on year to £43.1 million in 2016.

FFA UK said impersonation and deception scams, as well as online attacks to compromise data, continued to be the primary drivers behind financial fraud losses in 2016.

In all of these methods, criminals target personal and financial information, including card data, which they then use to commit fraud.

In an impersonation and deception scam, a criminal purports to be from a legitimate and trusted organisation, such as a bank, the police, a utility company or a government department.

These scams typically involve the fraudster contacting a customer through a phone call, text message or email.

FFA UK's figures show that in 2016, overall financial fraud losses across payment cards, remote banking (covering internet banking, telephone banking and mobile banking) and cheques totalled £768.8 million in 2016, an increase of 2% on the previous year.

Fraud losses on UK-issued cards totalled £618 million in 2016, an increase of 9% on 2015. Over this period, overall card spending grew by 6%.

Within the overall card figures, losses on purchases made remotely increased by 9% to reach £432.3 million in 2016.

Remote purchase fraud happens when stolen payment card details are used to make purchases on the internet, over the telephone or through mail order.

E-commerce card fraud totalled around £308.8 million last year, up 18% compared with 2015.

A campaign called Take Five encourages people to pause for thought before handing over personal details or transferring money.

Katy Worobec, director of FFA UK, said: "Banks take the threat of fraud extremely seriously and continuously invest in advanced detection and verification systems to protect customers.

"At the same time criminals continue in their attempts to circumvent this security by targeting customers for their personal and security information.

"It's vital that everyone follows the advice of our Take Five campaign and safeguards their details."

Here are some tips from the Take Five campaign:

:: Never give details such as your Pin or full password;

:: Do not assume an email request or caller is genuine;

:: Do not be rushed - a genuine organisation will not mind giving you time to stop and think;

:: Listen to your instincts;

:: Have the confidence to refuse unusual requests for information.