When I heard the new UK Finance figures released this week on APP fraud, I was stunned. This has led to increased calls for banks to improve their anti-fraud measures, particularly for cross-border transactions. In 2023, APP fraud cases exceeded 232,000, leaving victims to shoulder an awful £144 million in losses. This figure, a shocking 34% increase from last year, underscores the growing threat of financial scams.
Seventy-one percent of these incidents were purchase scams. In each of these instances, people inadvertently paid for products or services that turned out to be nonexistent—or never delivered. Last year APP fraud cases were down by 20%, accounting for well under 186,000. Yet the surge in purchase scams is a troubling sign for consumer protections that can’t be overlooked.
Trends in APP Fraud
The 2022 report shows that there is a significant change in the type of APP fraud. In fact, purchase scams accounted for the majority of reported scams. The overall number of cases fell to its lowest level in five years. By 2024, international payments made up 11% of APP scam losses—a figure that’s almost doubled the 2023 rate. This change highlights just how perniciously times scammers are changing tactics, trying even harder to get your personal information often through phishing schemes.
In particular, scammers have gotten more sophisticated in how they target consumers by obtaining sensitive card information and attaching it to digital wallets controlled by criminals. They dupe victims into revealing one-time passcodes that banks send their customers. This manipulation complicates the ability to push back against these fraudulent tactics even further.
Calls for Action
Rocio Concha, director of policy and advocacy at Which?, said all consumers need to be protected from these disturbing trends. She stressed that both banks and payment companies need to improve anti-fraud measures, especially for cross-border payments. She echoed our calls for the independent review of the mandatory reimbursement scheme announced for October to take these emerging trends into account.
Financial institutions need to change their approach to risk and security. This modernization is critically needed to keep pace with the evolving nature of financial fraud.
The rules that came into effect last October require UK banks and payment firms to refund customers who have been tricked into sending money to scammers. These regulations only govern transactions among UK bank accounts. As fraud tactics become increasingly advanced, banks are under intense pressure to continually innovate on their protective measures.
Awareness and Prevention
The increase in APP fraud has caught the attention of regulators. UK Finance has raised the alarm over scams which trick innocent people into believing they are transferring money safely. They helped alert consumers to a new scam in which people are promised loans but must pay an upfront fee first. Scammers often pose as representatives of UK Finance, and they warn that anyone who says they can sell you products on their behalf is a fraud.
These announcements are cues for all consumers to stay aware and on guard when entering financial transactions. With scams rapidly increasing, the responsibility should fall on all financial institutions as well as consumers to partner together in stopping fraud.