Britons lost a whopping £1.2 billion to fraud by 2022, according to a new report from UK Finance – the equivalent of £2,300 per minute.
However, we seem to be better at recognizing and avoiding scammers. The total amount of money fell by 8 percent compared to 2021, while the total number of reported fraud cases also fell by 4 percent to just under three million.
For the first time, UK Finance also looked at how and where people were most likely to fall victim to a scam – both in the real world and online.
Below we look at the situations where people may need to be most careful.
Where are people most likely to get scammed? UK Finance says 78% of authorized fraud cases start online, with social media making up the largest number
Where did scammers make the most money?
UK Finance divided fraud into two categories: authorized and unauthorized.
Authorized fraud is when someone is tricked into depositing money into a scammer’s account or handing over a password. In other words, they take an action or voluntarily provide information that facilitates the fraud.
Unauthorized fraud refers to cases where the victim is not directly involved, for example, purchases made using a stolen credit card.
When this happens, banks and credit card companies are required by law to protect them from losses – while authorized fraud victims may find it more difficult to get their money back.
Within the £1.2 billion total, unauthorized fraud losses involving payment cards, remote banking and checks reached £726.9 million in 2022, down less than one per cent from 2021.
Money stolen via payment cards made up the lion’s share at £556.3m, up 6 per cent from 2021.
Fraud related to lost and stolen cards rose 30 per cent to £100.2 million, and card ID theft, where a criminal opens or takes over a card account in someone else’s name, nearly doubled to £51.7 million.
Losses from authorized fraud – also known as authorized push payments or APPs – accounted for £485.2 million in total fraud, down 17 per cent from 2021.
Distance purchase fraud, where a criminal persuades someone to give up their card details and uses it to buy something online, over the phone or via mail order, remains the largest category of authorized losses at £395.7m – although this figure fell again on the previous year.
Purchase scams were the most common type of scam, accounting for 57 percent of all reported cases of authorized fraud. Case volumes in this category reached the 100,000 mark for the first time.
| Source | A number of cases | Value of losses |
|---|---|---|
| Online | 78 percent | 36 percent |
| Telecommunications | 18 percent | 44 percent |
| 2 percent | 12 percent | |
| Other | 2 percent | 7 percent |
| Source: UK Finance Annual Fraud Report | ||
Where do scammers find their victims?
The report found that 78 percent of authorized fraud cases start online, for example on a website or social media.
Social media platforms account for the largest number of online fraud cases, accounting for about three quarters of the total.
Meanwhile, 18 percent of fraud stems from telecommunications, such as a phone call or text message. However, scams that start this way tend to be higher value things like impersonation fraud.
Although it accounts for less than a fifth of cases, telecommunications fraud accounts for 44 percent of total financial losses due to authorized fraud.
Only 2 percent of authorized fraud originated in an email.
Bank calls on Meta to better protect users against scams
Last week, TSB revealed that scams via Facebook, Whatsapp and Instagram – all owned by tech giant Meta – account for 80 percent of fraud cases across the top three fraud categories.
TSB heavily criticized Meta and called for more to be done to protect customers from fraud.
The bank has a Fraud Refund Guarantee, which reimburses 97 percent of all fraud cases. However, not all banks have this.
Paul David, director of fraud prevention at TSB, said that ‘action by social media companies and phone companies to reduce fraud is crucial – as these industries need to take more responsibility for the safety of their users’.
Risk: Social media websites account for about three quarters of authorized online fraud
UK Finance said it would like tech companies to share some of the burden when it comes to compensating fraud victims, along with banks.
It said social media companies had a huge amount of data and could work together much more to prevent fraud on their platforms.
Commenting on the findings, David Postings, chief executive of UK Finance, said: ‘Our data shows just how much fraud comes from online platforms and via telecommunications.
“The government’s new fraud strategy rightly says that we need to focus on stopping at the source and that these other sectors need to do much more to address the problem they are facilitating.”
AI and ChatGPT ‘will help fraudsters’
UK Finance also said the rise of artificial intelligence technology could help scammers take money from their victims.
AI is getting better at spoofing people, for example with the emergence of Chat GPT – a technology that can generate text fueled by massive amounts of data.
Face and voice changes during video calls are also a cause for concern, it said, as it could make it easier for fraudsters to automate their processes, especially through the use of language and the replication of an individual’s voice patterns. which could give rise to more sophisticated scams.
Daniel Holmes of financial fraud detection software Feedzai warns that “risks remain high as fraudsters adapt and use increasingly sophisticated tactics and technology to fool consumers.”
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