Fraud losses from people tricked into transferring money directly to criminals jumped 39% year-over-year in 2021, according to figures from an industry trade body.
Some £583.2million was stolen last year by Authorized Push Payment (APP) fraud, UK Finance said.
This is a 39% increase on the £420.7m APP losses recorded in 2020.
APP losses were split between personal customers (£505.8 million) and non-personal or business customers (£77.4 million).
Nearly 40% of APP losses last year were due to identity theft scams.
Money has also been lost through purchase and investment scams, with bill scams and romance scams also falling within the range of frauds.
A total of £271.2 million in losses was returned to victims of APP scams, representing less than half (47%) of losses.
UK Finance recorded 195,996 incidents of APP scams in 2021. Of this total, 188,964 cases involved personal accounts and 7,032 cases involved non-personal accounts.
The criminals posed as a range of organizations such as the NHS, banks and government departments via phone calls, text messages, emails, fake websites and social media posts to trick people into to hand over their personal and financial information, UK Finance said. They used this information to convince people to authorize a payment.
Many banks have signed up to a voluntary APP Scam Code that reimburses people in cases where neither they nor their bank are to blame. However, some worry that the code is not always applied consistently.
The government has previously said the Payments Systems Regulator (PSR) will be able to require banks to reimburse losses from APP scams as part of the measures in the Financial Services and Markets Bill.
Banks can also sign up for a “159” pilot program, an initiative that encourages consumers to hang up on a phone call that may be a scam and dial 159 to speak to their bank.
Looking specifically at cases handled under the voluntary code, 51 per cent, or £238.1 million in losses, were returned to customers last year, according to the report.
In total, more than £1.3 billion was stolen through fraud and scams in 2021, UK Finance said.
Unauthorized financial fraud losses on payment cards, branchless banking and checks totaled £730.4m in 2021, down 7% from 2020.
UK Finance added that the banking and financial sector prevented a further £1.4billion of unauthorized fraud from falling into the hands of criminals last year, which equates to 65.3p for every pound attempted. of unauthorized fraud stopped without loss.
He said he had long called for greater cross-sectoral action to tackle scams and would continue to work with the government on upcoming legislation in this area.
Katy Worobec, managing director of economic crime at UK Finance, said: “Unauthorized fraud losses have fallen over the past year, but this type of criminal activity remains a major problem.
“Through the introduction of new measures such as Strong Customer Authentication, coupled with continued investment in technology, the banking and finance industry is preventing significant amounts of fraud.
Losses from authorized fraud have increased again this year, with criminals targeting people through a variety of sophisticated scams, with much of the criminal activity taking place outside the banking sector, often involving online platforms and technological.
“That’s why we continue to call on other industries to play a greater role in helping to protect customers from the scourge of fraud.
“The upcoming Economic Crime and Corporate Transparency Bill is an important development and provides an opportunity for the government to give new powers over information sharing and tracking stolen money.
“These are things we have been calling for for a long time and we will support efforts to work together and stop the fraud in the first place.”
UK Finance urges clients to follow the advice of the Take Five to Stop Fraud campaign and to remember that criminals are experts at impersonating people, organizations and the police.
They will spend hours researching people for their scams and may try to pressure people into making a decision they later regret.
People should contact their bank immediately if they believe they have fallen for a scam and report it to Action Fraud.
Emma Lovell, chief executive of the Lending Standards Board (LSB), which oversees the APP Voluntary Scam Refund Code, said: “The key question all sectors and industries should be asking is how can we prevent scams? APP to occur in the first place?
“Nobody should be paid out because of criminal activity. Evidence shows that scams have an impact on the mental health of victims, leaving lasting feelings of guilt and shame.
“Reimbursement alone cannot reverse this damage, nor can it reverse the fact that proceeds from scams often fund organized crime and other serious crimes.”
Here’s how different types of authorized fraud losses added up in 2021, according to UK Finance, and the annual percentage increase:
– Investment scam, £171.7m, 57%
– Impersonation scam: police/bank staff, £137.3m, 51%
– Identity theft scam: Other, £77.5m, 39%
– Purchase scam, £64.1m, 25%
– Invoice and money order scam, £56.7m, minus 17%
– Advance Charge Fraud, £32.1m, 45%
– Romance scam, £30.9m, 73%
– CEO fraud, £12.7m, 165%