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- A rise in the money lost to investment scams is partly to blame
More than £600million was swindled from innocent victims by scammers in the first half of the year, a report today reveals.
Criminals stole £629.3million between January and June – a 3 per cent climb compared to the same period in 2024, according to banking trade group UK Finance.
It has today released its six-monthly fraud report, which has uncovered the worrying scale of scams.
While the amount of cash that has been pilfered has only slightly increased, the number of fraud cases has skyrocketed.
There were more than 2.09million fraud incidents in the first six months of the year, some 17 per cent more than last year.
Ben Donaldson, of UK Finance, said: 'Fraud continues to be a major threat to our society and our economy, and criminals continue to adapt ways to steal victims' money and funnel significant sums of money to criminal enterprises, impacting society greatly.
'Despite the ongoing investment and prevention measure by the industry, the majority of fraud originates outside the banking system, online and over the phone, where manipulation begins long before any payment is made.'
Both unauthorised and authorised fraud have grown compared to the first six months of 2024.
Unauthorised fraud is where crooks make payments using stolen card details or compromised bank accounts. Authorised fraud is when someone is tricked into sending money to a criminal, usually because they are pretending to be someone they are not.
An example of unauthorised fraud is remote purchase fraud. This where tricksters use stolen card details to buy something on the internet, over the phone or through mail order.
The amount lost to unauthorised fraud has dropped by 3per cent to £372million – but the number of cases has soared by some 19 per cent to 1.98 million, UK Finance said.
The victim may not even know that their card details have been stolen and could still have their physical card with them when the fraud occurs.
That is because, in some cases, the details are stolen by criminals who hacked into the online systems of retailers and other businesses and took the details of their customers. Worryingly, the details can be used months or even years after the data breach.
They could also steal cards by distracting victims while they are using an ATM or by attaching a device to the machine.
When you make a purchase online, your current account provider will often ask you to pass an additional level of security – especially if you are making a payment to someone for the first time.
You will be sent a one-time password (OTP) to your mobile phone, which you then have to input before the transaction goes through.
This is designed to stop fraudsters from making unauthorised transactions if they get hold of your card details. OTPs can also be used to register your card in a virtual wallet such as Apple Pay or Google Pay.
However, UK Finance warns fraudsters use social engineering techniques to trick their victims into handing over the OTPs.
These victims are protected against losses – and are refunded in more than 98 per cent of cases.
Banks did stop £870million of this so-called unauthorised fraud with their security systems – some 70pence in every £1 which was attempted to be stolen.
Authorised fraud – also known as APP fraud - is when a victim is tricked into sending money to someone they believe is a legitimate payee.
Crooks engage in clever social engineering techniques to gain your trust, whether that's posing as an official such as a bank or police officer, or acting as an interested romantic partner simply to obtain your money.
Then a victim willingly transfers money to a scammer, thinking they are someone else or the money will be used for a different reason.
While cases of APP – authorised push payment - fraud plummeted by eight per cent to 110,747, losses surged by 12 per cent when compared with the same period in 2024 to £257.5million.
Investment scams – where large amounts of money are typically stolen – are the driver of this hike. Almost £98million was stolen through this type of fraud, a 55 per cent increase on the same time last year.
Plus, losses from romance scams, where victims are tricked into believing they are in a relationship, increased by 35 per cent.
Why is fraud rising?
Jonathan Frost, of fraud prevention company BioCatch, said: 'The increase in fraud is about human vulnerability. APP scams work because they turn customers into unwitting accomplices, and awareness campaigns alone can't solve that. Fraudsters are now using mobile and remote channels to bypass authentication and pressure victims in real time.'
Victims of an APP fraud must be reimbursed up to £85,000, sometimes minus an excess, unless there is gross negligence by the victim, as of October 2024.
More than £159 million of APP losses were returned to victims between January and June, 62 per cent of the total amount stolen.
But this report hints that while victims can sometimes get their money back, the scheme is not solving the country's fraud epidemic.
Frost says: 'The mandatory reimbursement requirements have undoubtedly strengthened consumer protection, returning millions to victims and creating an incentive for banks to set up and invest in better fraud and financial crime detection.
'The policy has struggled, however, to stop the underlying crime, with APP fraud continuing to rise. Preventing scams before the transaction occurs must be the goal. This requires deploying better fraud detection tools and behavioural technology to decrease APP losses.'
Many industry bodies have shifted the blame to social media platforms and other online websites, where chunks of scams originate.
Even UK Finance says APP fraud is driven by the 'abuse of online platforms and telecommunications'.
Two in three of this authorised type of scam began of online platforms, which accounts for 30 per cent of the amount of money lost.
Riccardo Tordera-Ricchi, director of policy and government relations at The Payments Association, said: 'We have always said that just focusing on reimbursement was not a definitive solution. Fraud is on the rise, and that's because policy and rule makers have failed to address the main issue: blocking fraud at source, preventing crime from happening and mandating responsibility for social media.
'We urge regulators and the government to deeply analyse this data and learn the necessary lessons.'
Meanwhile Richard Daniels, director of fraud at TSB, said: 'The scale of fraud targeting UK households is alarming – and being driven and enabled by vulnerabilities in other sectors – especially social media.
'Phone companies and social media platforms must urgently act to cut scam content off at source – and we'd advise the public, and businesses to remain highly vigilant to potential scam content.'
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