Financial fraud losses rose by 6 per cent in the first half of 2015, according to the latest figures from the trade body Financial Fraud Action UK (FFA UK).
Fraud losses on payment cards, online and telephone banking and cheques totalled £325.3m in January to June 2015. That was up from £307.7m during the same period in 2014. According to FFA UK the new data highlights increasing attempts by fraudsters to target directly consumers, who should be vigilant about scams attempting to steal their personal information.
For the first time FFA UK is publishing the value of prevented fraud. The new figures show that banks’ and card companies’ security systems detected and prevented a total of £910.9 million worth of attempted card, online and telephone banking and cheque fraud from occurring in the first half of 2015 – £7 in every £10 of fraud.
Card fraud
Fraud losses on UK cards totalled £249.9m during January to June 2015, an rise of 1 per cent on the same period in 2014. Over this period overall card spending has grown substantially, so card fraud as a proportion of card purchases has fallen to 6.9p for every £100 spent, the lowest level since 2011 and down from 7.5p at the end of 2014. A total of £355.4m of card fraud was stopped by bank and card company security systems during January to June 2015. This is equivalent to £6 in every £10 of attempted fraud being prevented.
Losses on purchases made using a card remotely – those made online, over the phone or by mail order – remained flat at £174.4m. The number of incidents of remote purchase fraud fell by 5 per cent. Contained within this figure, e-commerce card fraud totalled an estimated £109.9m, also flat compared to 2014. At the same time, online card spending increased by 14.3 per cent to £67.4 billion in the first six months of 2015, up from £59.0 billion in the equivalent period of 2014.
Card ID theft losses rose to £18.8m, up by 28 per cent on the first six months of 2014. Card ID theft occurs when a fraudster either sets up a new account in someone else’s name or takes over an existing account using stolen information. A key driver is the rise in scams in which fraudsters target individuals to steal their personal and financial information, which is then used to commit ID theft. Card ID theft represents only 7.5 per cent of all card fraud.
Overall card fraud losses in the UK fell by 4 per cent to £167.5m, while overseas losses rose by 14 per cent to £82.4 million. A major factor is criminals using UK cards in overseas countries which do not have the same level of security in place, such as the use of additional passwords for online purchases. Fraud on contactless cards remains very low with £516,500 of losses during the first six months of 2015, compared to spending of £2.58 billion over the same period. This is equivalent to 2p in every £100 spent on contactless and represents only 0.2 per cent of all card fraud.
Telephone and online banking
To establish consistency across all fraud categories, from this year FFA UK is reporting the gross fraud losses for remote banking (online and telephone banking) and cheques, instead of the net figures as previously published. The gross figures represent the value of fraud including any funds subsequently recovered by a bank and as such provide a clearer indication of the scale of attack seen by the industry. Total remote banking losses rose by 37 per cent in the first six months of 2015 to £65.9m. Within the total, telephone banking losses rose by 95 per cent to £14.4m, which represents 4.4 per cent of total financial fraud. Internet banking losses rose by 27 per cent to £51.2m. However, a third (£20.6m) of the losses across all remote banking channels were recovered after the incident. A total of £293.5m of attempted remote banking fraud was stopped by bank security systems. This is equivalent to £8 in every £10 of fraud being prevented.
The increase in remote banking fraud losses is due mainly to the rise in scams aimed at customers, often over the telephone, in which fraudsters attempt to trick victims into revealing personal or financial information, such as passwords or passcodes.
The scam typically involves the criminal pretending to be calling from a bank, the police or another trusted organisation and claiming that there has been fraud on a customer’s account. Consumers are urged to be alert for any unsolicited or suspicious calls, texts or emails and follow the advice in the Joint Declaration of UK Banks, Card Issuers and Building Societies on how to take steps to avoid becoming a victim.
Criminals also use malware and viruses to steal personal information, such as bank log-in details, from customers. The stolen information is then used to commit fraud on accounts. Customers are advised to ensure they update their computer security software regularly and to be careful not to open any suspicious links or emails.
Cheque fraud
Cheque fraud losses fell by 21 per cent in the first six months of the year, to £9.5m. This is the third consecutive year of declining losses and lowest ever total reported for the first six months. Some £262m of cheque fraud was prevented by bank monitoring systems. This is equivalent to £9.50 in every £10 of attempted cheque fraud being stopped.
Comment
Katy Worobec, Director of Financial Fraud Action UK, said: “Banks use sophisticated security systems to protect their customers, stopping over two-thirds of fraud from occurring. However, the industry is never complacent and banks are continuously improving the tools they use to beat the evolving threat of fraud. Fraudsters are now attempting to trick people into handing over passwords, PINs and passcodes – the keys to the door – so it’s vital that customers safeguard their personal and financial information. Criminals impersonate many different organisations, including banks, the police, government departments and utility companies. That’s why we support calls for a national fraud campaign encompassing all those organisations best placed to help customers.”
Detective Chief Inspector Perry Stokes, Head of the Dedicated Card and Payment Crime Unit, said: “Criminals can be extremely convincing, so it’s really important to be on guard. Be very cautious about giving out your personal information. Remember that people aren’t always who they say they are. Just because someone has a bit of information about you does not mean they are definitely genuine. If you get a call, text or email out of the blue asking for your details or for you to transfer money, then do not respond. Instead report it to your bank straight away.”
Advice to consumers and businesses
Steps to avoid becoming a fraud victim:
Be aware of the advice in the Joint Declaration of UK Banks, that your bank or the police will never:
o Phone you to ask for your four-digit card PIN or your online banking password, even by tapping them into the telephone keypad.
o Ask you to withdraw money to hand over to them for safe-keeping.
o Ask you to transfer money to a new account for fraud reasons, even if they say it is in your name.
o Send someone to your home to collect your cash, PIN, payment card or cheque book if you are a victim of fraud.
o Ask you to purchase goods using your card and then hand them over for safe-keeping.
Ensure you have the most up-to-date security software installed on your computer, including anti-virus. Some banks offer free security software: check your bank’s website for details.
Only shop on secure websites. Before entering card details ensure that the locked padlock or unbroken key symbol is showing in your browser.
Always be suspicious of unsolicited emails that are supposedly from a reputable organisation, such as your bank or the tax office and do not click on any links in the email. Make sure you are the only person who knows the PIN for your card. Shield the PIN with your free hand whenever you type it into a keypad in a shop or at a cash machine. Check your bank and card statements for unusual transactions. If you spot any let your bank or card company know as soon as possible. Rip up or preferably shred statements, receipts and documents that contain information relating to your financial affairs when you dispose of them. Some banks offer paperless statements. When writing a cheque make sure you draw a line through all unused space on the payee line and the amount line to help prevent the cheque being fraudulently altered.
Advice to businesses to avoid becoming a victim of remote purchase fraud:
Ask your bank or card processor about the online protection offered by card schemes, such as Verified by Visa, SecureCode by MasterCard and American Express’ ‘Safe Key’, which help make transactions over the internet safer from the threat of fraud.
Know your customer: assess a customer’s profile, order and delivery details before accepting a transaction. Be wary of high value or unusual orders from customers you do not know, particularly if the product is easily resalable. Use the banking industry’s Address Verification Service, which compares the delivery address provided for the order with the billing address details for the payment card held by the card issuer.
Maintain a record of fraudulent accounts and transactions to prevent further breaches – fraudsters will continue to attack businesses until the window of opportunity is closed.
About Financial Fraud Action UK (FFA UK)
Its membership includes banks, credit, debit and charge card issuers, and card payment acquirers in the UK. It provides a forum for members to work together on non-competitive issues relating to financial fraud and works with The UK Cards Association on industry initiatives to prevent fraud on credit and debit cards, and the Cheque & Credit Clearing Company on credit clearing and cheque fraud.
More about The Cheque & Credit Clearing Company at www.chequeandcredit.co.uk.
