Fraud losses soar by 30% in a year as Covid pandemic sparks huge rise in text and call cons

Fraud losses have soared by 30 per cent in a year with criminals now stealing £2million per day, according to a trade association.

In total, £753.9million was stolen through fraud in the first half of this year – a 30 per cent increase compared with the same period in 2020.

Unauthorised fraud losses stood at £398.6million, which was a seven per cent increase. 

Meanwhile, UK Finance warned fraud has reached a level where it poses a national security threat.

It said banks cannot solve the problem on their own and Government-coordinated action is needed, including ensuring that all economic crime is brought within the scope of the Online Safety Bill.

It comes amid a huge rise in text and call cons during the coronavirus pandemic, with cyber security experts revealing in May that they had taken down more scams in the last 12 months than the previous three years combined.

Some £355.3million was lost due to fraud where people had authorised the transaction in the first half of 2021 – marking a 71 per cent jump compared with the same period in 2020 – according to UK Finance.

Within the total, £296.1million of was due to personal customer losses and £59.2million was from business losses.

But less than half (42 per cent or £150.7million in cash terms) of the total was returned to customers. 

Jenny Ross, Which? Money editor said: ‘This shameful situation raises serious questions about the payment regulator’s response and the behaviour of banks that all too often wrongly try to pin the blame on their customers.

‘The regulator must introduce mandatory and more robust reimbursement requirements for all payment providers, to ensure that customers are treated fairly and consistently when they fall victim to a bank transfer scam.’

A voluntary code was set up to reimburse blameless bank scam victims – but concerns have been raised that some banks are not following it consistently and are expecting customers to have a sophisticated knowledge of scams. Not all banks have signed up to the code.

UK Finance published figures relating to those cases within the overall total which were dealt with under the voluntary code in the first half of 2021.

Of those cases, which have a total value of £248.6million, £121.7million or 49 per cent was reimbursed to victims. Just over two thirds (68 per cent) of cases involved values of less than £1,000, while 6 per cent involved more life-changing sums of £10,000 and over. 

Criminals use various forms of social engineering methods to manipulate people, including scam phone calls, texts and emails, as well as fake websites and social media posts.

Within the total, there was a 131 per cent increase in losses due to criminals impersonating the police and bank staff, a 95 per cent increase in losses due to investment scams and a 110 per cent uplift in fraud losses where people pay fees in advance. Losses due to romance scams also increased by 62 per cent.

Investment scams are heavily enabled by fraudulent advertising, search engines and social media, UK Finance said. In some cases, social media ‘influencers’ are used to promote such schemes and create an air of legitimacy, it added.

In previous years, the bulk of fraud losses have been unauthorised frauds mainly committed using payment cards.

But for the first time, the amount of money stolen through bank transfer fraud – also known as authorised push payment (APP) fraud – has overtaken card fraud losses.

Criminals are also changing their tactics when moving money. They have been targeting people as young as 14 using social media to become money mules – where their bank account is used to launder stolen cash.

Intelligence also shows a notable increase in the use of cryptocurrency wallets being used to take stolen money outside of the banking system quickly, UK Finance added. 

Some £6.49 in every £10 of attempted unauthorised fraud was blocked by banks and other financial firms, UK Finance said.

Katy Worobec, managing director of economic crime at UK Finance said: ‘Our latest figures show the sheer scale of fraud taking place in the UK and highlight clearly the need for coordinated action to address this threat.

‘The banking and finance industry invests billions in advanced systems to try and stop fraud happening in the first place, but criminals are exploiting weaknesses outside of banks’ control to trick customers into making payments directly to them.

‘This is why we are calling for coordinated action and increased efforts from Government and other sectors to tackle what is now a national security threat.’

TSB has its own fraud refund guarantee, which it said has resulted in 98 per cent of its fraud cases being refunded.

Debbie Crosbie, chief executive at TSB, said: ‘Our experience shows the importance of being transparent on levels of protection and reimbursement, but beyond banks, social media and tech companies need to do more to reduce the increasing amount of scams emerging online.’

It follows experts overseeing a 15-fold rise in the removal of online campaigns compared to 2019, according to the National Cyber Security Centre. 

There was a jump in the number of phishing attacks using NHS branding to dupe victims, with the Covid-19 vaccine rollout used as a lure via email and text message to harvest people’s personal information for fraud.

Some 43 fake NHS Covid-19 apps hosted outside of official app stores were also pulled.

Dr Ian Levy, technical director of the NCSC previously said: ‘The big increase in Covid-19 related scams, fake vaccine shops, fake PPE shops, show – to me anyway – that criminals have no bounds on what they will abuse and the fear that they engender to try and harm and defraud people.’

UK Finance urges customers to follow the advice of the Take Five to Stop Fraud campaign.

It is okay to reject, refuse or ignore any requests and only criminals will try to rush or panic people, it said.

People should contact their bank immediately if you think they have fallen for a scam and report it to Action Fraud.