Despite a slight decrease in total fraud losses, the report underscores significant trends and challenges that both consumers and financial institutions face in the ongoing battle against fraud. We have explored some of these key findings below.
Unauthorised Fraud
Unauthorised fraud, where account holders themselves do not provide authorisation for the payment to proceed. In 2023, unauthorised fraud losses amounted to £708.7 million, marking a 3% decrease from the previous year. The report highlights a significant rise in card identity theft, which surged by 53% compared to 2022 and by 200% since 2021. This indicates a shift among fraudsters who now focus on compromising card identities through direct channels before making fraudulent transactions.
Conversely, losses from unauthorised web banking transactions decreased, while mobile banking fraud cases increased by 62%. This shift reflects the growing preference for mobile banking, with over 85% of traffic at some tier-one institutions now coming from mobile devices. Fraudsters are adapting by targeting these platforms.
Authorised Fraud
Authorised fraud, where account holders are tricked into making payments to fraudsters, saw a notable decline. Total authorised push payment (“APP”) fraud losses decreased by 5% to £459.7 million in 2023. However, the number of cases increased by 12%, reaching 232,429 incidents.
Within the APP fraud category, purchase scams and investment scams were particularly prevalent. Purchase scams, where victims are deceived into buying non-existent goods or services, saw a 28% increase in losses. Investment scams also remained significant, despite a slight 5% decrease in losses from the previous year.
Impact of Artificial Intelligence on Fraud
The report also addresses the growing role of artificial intelligence (“AI”) in both perpetrating and combating fraud. Fraudsters increasingly use AI to create sophisticated scams, including deepfake videos and voices, making it harder for victims to distinguish between legitimate and fraudulent communications. This trend underscores the need for financial institutions to leverage AI in their fraud detection systems to stay ahead of these sophisticated attacks.
Future Outlook
The fight against fraud requires a collaborative approach. The report advocates for a unified effort involving banks, social media platforms, technology companies, and telecoms to effectively tackle the complex and borderless nature of fraud. Proactive measures such as educating consumers, enhancing detection capabilities and improving data sharing are critical for future success.
In conclusion, while progress has been made in reducing fraud losses, the landscape continues to evolve with new threats and challenges. The financial sector must remain vigilant and innovative, embracing advanced technologies and collaboration to protect consumers and maintain financial integrity.
The full report can be found here - https://www.ukfinance.org.uk/policy-and-guidance/reports-and-publications/annual-fraud-report-2024
