Customers ‘tricked into sending £354m in year to APP fraudsters’
A total of £354 million was lost year through scams in which victims were tricked into transferring money directly from their account to a fraudster, according to figures from trade association UK Finance.
Financial providers were able to return a total of £83 million of the losses.
In these authorised push payment (APP) scams, a customer is duped into sanctioning a payment to another account that is controlled by a criminal.
Some £228 million of losses in 2018 came from personal accounts and £126 million was from business accounts.
In total there were 84,624 APP scam cases, split between 78,215 cases involving personal accounts and 6,409 cases involving non-personal accounts.
In February, the APP scams voluntary code was agreed following work between the industry, consumer groups and the Payment Systems Regulator.
The code, which comes into effect on May 28, will bring new protections for customers of payment service providers who sign up to it.
It commits firms to reimbursing victims of APP scams in any scenario when their bank or payment service provider is at fault and the customer has met the standards expected of them under the code.
Under existing legislation, if a customer authorises the payment themselves they have no legal protection to cover them for losses.
UK Finance started gathering data on APP scams from 2017.
Losses due to APP scams in 2017 totalled £236 million across 43,875 cases – but UK Finance said the figures are not directly comparable with 2018 as new industry guidelines have improved the identification and reporting of APP scams and more banks have also started reporting data.
UK Finance’s figures also show the finance industry stopped £2 in every £3 of attempted unauthorised fraud last year.
In an unauthorised fraudulent transaction, the account holder themselves does not provide authorisation for the payment to proceed and the transaction is carried out by a third-party.
Customers are legally protected against losses caused by unauthorised fraud.
UK Finance said industry research indicates customers are fully refunded in over 98% of unauthorised fraud cases.
Katy Worobec, managing director of economic crime at UK Finance, said: “Last month, the finance industry and consumer groups agreed a voluntary code which will increase protection for customers from authorised push payment scams.
“It delivers a significant commitment from signatories to reimburse victims when the customer has met the standards expected of them under the code.
“At the same time the industry continues to fight fraud on every front to protect customers and prevent this kind of crime – investing in advanced security systems and new ways to track stolen funds, assisting law enforcement in tackling the criminals and supporting the government in improving the ways in which intelligence is shared.”