More than two-thirds of scams where someone is tricked into transferring money to a fraudster start online, according to UK Finance.
The trade association said its analysis of nearly 7,000 authorised push payment (APP) scam cases found that 70% of frauds originated on online platforms, including emails, social media, websites and apps.
APP scams happen when someone is tricked into transferring money directly into a fraudster’s bank account, perhaps because the criminal is posing as someone else or selling goods that do not exist.
UK Finance said that with the Covid-19 pandemic accelerating consumers’ shift towards doing more activities online, fraudsters are adapting their tactics.
Most investment (96%), romance (96%) and nearly all purchase (98%) scams originate online, UK Finance said.
The money lost to APP scams totalled nearly half a billion (£479 million) in 2020, with proceeds often funding serious organised criminal activities, including terrorism, drug trafficking and child sexual exploitation, UK Finance added.
It said the Online Safety Bill needs to include all economic crime for a holistic approach.
Many banks have signed up to a voluntary code to reimburse blameless victims of APP scams, but there have been concerns that some banks are interpreting the code differently to others, resulting in different reimbursement rates.
David Postings, chief executive at UK Finance, said: “As more of us have shifted online because of the pandemic, we’ve seen a spike in money mule activity and investment and purchase scams because criminals can target people directly in their homes across online platforms.
“The banking and finance industry is continuing to tackle fraud on all fronts, but there is a limit to what we can do alone.
“We were pleased to hear that the upcoming Online Safety Bill will tackle some aspects of fraud, but it won’t protect people from fraudsters’ online adverts and cloned websites.
“We encourage Government to include all economic crime within the Bill when it is formally introduced. Not doing so leaves a large proportion of the public at high risk of being scammed online, because criminals are experts in adapting their tactics to exploit any loopholes.
“I welcome the recent steps taken by some online platforms to work with us on tackling this issue.”
Recent successful initiatives include the industry-sponsored Dedicated Card and Payment Crime Unit working with social media platforms to take down 700 accounts linked to fraudulent activity last year, of which more than 250 were money mule recruiters.