UK Finance, a trade group, has released new statistics showing that purchase and romance scams cost British banking clients a record amount of money last year.
A 36% surge in purchase scams—in which fraudsters offer products, such as concert tickets, that never come to fruition—fueled a 12% increase in authorized push payment (APP) scams in 2023, which reached almost 230,000 cases. Scams like this caused a record-breaking £86 million in losses and constituted approximately 70% of all APP fraud.
As reported by UK Finance, fraud cost £1.17 billion last year, 4% lower than the sum lost in 2022.
Another kind of fraud, romance scams, saw record highs in both the number of incidents and the sums lost as victims were tricked into transferring money to someone they thought was in a relationship. Last year, fraudsters took £36.5 million, an increase of 17% from the previous year, by impersonating potential love partners.
Despite an increase in incidents, the amount lost to app payment fraud decreased by 5% to £459.7mn last year, and victims were better reimbursed by banks and payment firms. In 2022, victims had 51% of their damages recovered; last year, that number increased to 62%.
The implementation of Strong Customer Authentication has helped banks authenticate the identity of their clients, resulting in a roughly 10% decrease in payment card fraud losses this year.
The new information was released just before the October deadline, and payment processors and banks must meet to compensate victims of application payment fraud up to a cap of £415,000 per claim. Payment processing businesses have spoken out against the new regulations proposed by the Payments Systems Regulator, and Bim Afolami, the economic secretary to the Treasury, has also spoken out against them.
The banking industry has been pushing for a tax on telecommunications and social media firms to help pay for the costs associated with fraud. According to UK Finance’s research, nearly 80% of fraud begins online, and the majority of these instances involve purchases or other low-value frauds.
