Brits lost a whopping £171.7m from investment scams using authorised push payment (APP) fraud in 2021, a 57 per cent year-on-year increase.
Data from trade body UK Finance found that there were 12,074 cases of investment scams using APP fraud last year, a 48 per cent rise from 2020.
APP fraud is where the customer is tricked into authorising a payment to an account controlled by a criminal.
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Scammers impersonate organisations via phone calls, text messages, emails, fake websites and social media posts to trick people into handing over personal and financial information.
There were 195,996 APP scams in 2021 with combined losses of £583.2m, UK Finance said.
The biggest category of APP losses was impersonation scams, totalling £214.8m, followed by investment scams.
A total of £271.2m of losses were returned to victims of APP scams, accounting for 47 per cent of losses.
The UK Finance report found that £1.3bn was stolen through fraud and scams in 2021, comprising £730.4m of unauthorised fraud – where the account holder does not provide authorisation and their details are used without their knowledge – and APP fraud of £583.2m.
The banking and finance industry prevented a further £1.4bn of unauthorised fraud from getting into the hands of criminals, UK Finance said.
“Authorised fraud losses rose again this year as criminals targeted people through a variety of sophisticated scams, with much of the criminal activity taking place outside the banking sector, often involving online and technology platforms,” said Katy Worobec, managing director of Economic Crime at UK Finance.
“This is why we continue to call for other sectors to play a greater role in helping protect customers from the scourge of fraud.
“The upcoming Economic Crime and Corporate Transparency Bill is an important development and provides the opportunity for the government to give new powers on information sharing and tracking stolen money. These are things we have long called for and will support efforts to work together and stop the fraud happening in the first place.”
In response to the UK Finance report, the Lending Standards Board (LSB) has urged eligible firms to sign up to the Contingent Reimbursement Model (CRM) Code.
This is a voluntary regulatory framework, overseen by the trade body, which is dedicated to preventing and responding to APP scams.
“The voluntary CRM Code is the only set of protections that require signatory payment service providers to detect APP scams, prevent them from happening and respond to them when they are successful,” said Emma Lovell, chief executive of the LSB.
“Evidence shows the CRM Code’s introduction, and its prevention focus, has stalled an exponential rise in APP scams. That said, we must not rest on our laurels and payment service providers should not be treated as the only line of defence against these criminals.
“Often by the point of payment it is too late. Social engineering has convinced the victim that the payment is legitimate. The earlier prevention steps are taken, the greater the chance of protecting the customer.”