£236m lost in 2017 in authorised bank transfer scams

A total of £236 million was lost last year due to people and firms being tricked into transferring money to a fraudster, new industry figures have revealed.

Financial providers were unable to return nearly three-quarters (74%) of the total value of these losses to victims.

Trade body UK Finance has for the first time compiled annual data on losses due to authorised bank transfer scams - also known as authorised push payment (APP) scams.

This type of scam was the subject of a "super-complaint" made in September 2016 to regulators by consumer group Which?, which has been calling for banks to shoulder more responsibility when victims are tricked in this way.

Which? made the complaint over concerns that, unlike many other payment methods, victims conned into transferring money by bank transfer to a fraudster have no legal right to get their money back from their bank.

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UK Finance's figures show there were 43,875 reported cases of APP scams with a total value of £236 million.

Nearly nine in 10 (88%) of this total were consumers, losing an average of £2,784.

The remainder were businesses who lost on average of £24,355 per case.

Financial providers were able to return £60.8 million (26%) of the authorised push payment scam losses in 2017.

The complex process of trying to claw money back can be made even more difficult when there is more than one scammed person, the funds in the scammer's account are insufficient or comprise both clean and scammed money, or when funds have been transferred into a joint account.

Katy Worobec, managing director of economic crime at UK Finance, said: "Fraud is an issue that affects the whole of society, and one which everyone must come together to tackle.

"The finance industry is committed to playing its part - investing in advanced security systems to protect customers, introducing new standards on how banks respond to scam victims, and working with the Joint Fraud Taskforce to deter and disrupt criminals and better trace, freeze and return stolen funds."

She said the industry is also supporting the Payment Systems Regulator (PSR) on its work to tackle APP scams.

Responding to the Which? complaint, the PSR previously set out an action plan in December 2016.

In an update last month, it said an industry code will be in place from September, paving the way for victims of such scams to have better protection.

The Financial Ombudsman Service (FOS) will be able to take the code into account when clearing up new complaints from consumers about these scams.

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UK Finance's figures also show that banks and card companies prevented more than £1.4 billion in unauthorised fraud last year - equivalent to £2 in every £3 of attempted unauthorised fraud being stopped.

It said deception and impersonation scams continue to be a key driver of both unauthorised and authorised fraud.

Data breaches also continue to be a major contributor to fraud losses, UK Finance said.

Criminals use stolen data to commit fraud directly, for example card details are used to make unauthorised purchases online or personal details used to apply for credit cards.

Stolen personal and financial information is also used by criminals to target people in impersonation and deception scams, and can add apparent authenticity to their approach.