Half of £485 million stolen in transfer scams last year is not reimbursed to victims due to so-called ‘authorised’ frauds not protected by bank guarantees
- Of the £485.2million extracted from victims in 2022 only £285m was reimbursed
Nearly half of the £485million stolen by fraudsters in transfer scams last year was not reimbursed, an industry report has revealed.
The so-called ‘authorised’ frauds – in which account holders are tricked with fake purchases, impersonations or even cruel romance scams – are not fully protected by bank guarantees.
It meant that of the £485.2million extracted from such victims in 2022 only £285.6million, or 59 per cent, was reimbursed.
Payment regulators are considering new regulations requiring banks and building societies to reimburse victims of authorised push payment (APP) scams fully where the loss is greater than £100.
But the chief executive of UK Finance – the industry body which released the latest figures – rejected the idea.
Nearly half of the £485million stolen by fraudsters in transfer scams last year was not reimbursed, an industry report has revealed
‘My view is that we run the risk with total reimbursement that people won’t take enough care and I do think there is a balance to be struck,’ said David Postings. ‘I in no way want to victim blame. However, if there is literally no reason to take care about making a payment, why would anybody do that?
‘And my concern is that banks’ customers that aren’t affected by this are at some point paying the price for the reimbursement.’
Some UK banks have signed up to a voluntary reimbursement code. Those firms reimbursed 66 per cent of APP scams, the figures showed.
Others such as TSB operate their own guarantees. TSB recently said its policy saw 97 per cent of money paid back to scam victims.
Overall, more than £1.2billion was stolen through fraud in 2022, according to the UK Finance annual fraud report – equating to more than £2,300 every minute.
But this was a fall of 8 per cent on the year before.
The majority, £726.9million, was so-called ‘unauthorised’ fraud – for example, when card details or identities are stolen and the account holder has no role in authorising the payment. This figure was not much different in 2021.
The £485.2million lost to APP scams was down by 17 per cent. However the volume of cases, at 207,372, rose by 6 per cent. Nearly all of these involved personal accounts.
UK Finance said that safeguards such as the ‘confirmation of payee’ service – which checks that the name of the person receiving the money matches their account number – were having an impact.
The body said 78 per cent of APP fraud begins online and 18 per cent over the phone.
It wants the burden for reimbursing victims to be spread beyond the banking sector to include tech companies.
Mr Postings said: ‘These sectors need to do far more to tackle the problem they are facilitating.’ The report said: ‘APP fraud losses continue to be driven by the abuse of online platforms used by criminals to scam their victims.
‘These include investment scams advertised on search engines and social media, romance scams committed via online dating platforms and purchase scams promoted through auction websites.’
The figures on APP fraud showed that £114.1million was lost to investment scams, £177.6million to impersonations, £67million to purchase scams, £31.3million to romance scams and £13.4million to fraudsters posing as chief executives or other bosses.
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