Authorised push payment fraud sees huge increase as criminals switch tactics

More money has been stolen through authorised push payment (APP) scams than through card fraud as criminals have sought to avoid the automated checks within banking IT systems.

According to banking trade body UK Finance, there was a 71% increase in APP fraud in the first six months of this year, reaching £355m. During the same period, payment card fraud dropped by 9% to £262m.

The amount of money lost to fraudsters in the UK reached £754m, a rise of 30% from the equivalent period last year, which UK Finance described as being at a level where it poses a national security threat. “As such, the banking and finance industry is calling for government-coordinated action across all sectors to tackle the issue,” it said.

Total unauthorised fraud losses, including card fraud, were £398.6m, a 7% increase on last year. However, the banking and finance industry successfully blocked £736m worth of attempted frauds – £6.49 in every £10 of attempted fraud.

APP fraud, also known as bank transfer fraud, sees criminals use fake websites and emails to trick consumers into authorising payments to them as they attempt to avoid the security embedded into the banking system.

Banking systems have automated security checks on suspicious activity, making it more difficult for criminals to steal money. As a result, they are targeting human weaknesses through APP scams using phone calls, emails, text messages, fake websites and social media posts to trick people into handing over their personal data, before conning them into authorising payments to them.

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 to 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.”

Worobec added: “Criminals continue to target customers with a variety of scams, often via online platforms, and it is only through coordinated action that we will be able to really make progress in addressing the problem.”

In January, Anne Boden, CEO of digital challenger Starling Bank, called for cooperation between different sectors to clamp down on APP fraud.

In a blog post, Boden said other sectors must shoulder some responsibility for APP scams, particularly social media platforms. “Banks invest billions of pounds into tackling economic crime, but we cannot stop it on our own,” she wrote.

“Very often, [social media] accounts are used for advertising for ‘money mules’ for the purposes of money laundering, selling stolen identity and credit card data, phishing, bogus investment scams and impersonation fraud.”

Boden said banks “seem to have become the underwriter of all kinds of fraud that are not really financial fraud at all”.