UK Finance recently published its half-year report. Parts of it appear encouraging, but with overall fraud cases rising, the fraud-fighting community cannot rest.
I’ve taken a look at the numbers to understand what’s changing in the UK fraud landscape.
Less APP fraud: Is a paradigm shift upon us?
One of the standout headlines of the report is the decrease in APP fraud. While we’ve grown accustomed to losses declining (we’ve now seen decreases over five consecutive six-month periods), the first half of this year saw a drop in the volume of cases for the first time in two years.
We see APP fraud volumes at their lowest levels since 2022, and the value lost hasn’t been so low since 2020, when we saw APP fraud take off.
Evidently, these numbers don’t account for the recent changes brought about by the PSR, which may (and hopefully will) cause further decrease when we see the annual report from UK Finance in six to nine months’ time.
On the topic of PSR and reimbursement, buried in the numbers of the report we see that for the second consecutive quarter, banks have refunded less money to APP victims than the year before.
While 2023 saw £152.8 million returned to victims, in 2024 that sum has dwindled by 17% (£126.7 million). Granted, overall attempts are also down (£213.7 million this year compared to £239.3 million last year), but calculating the percentage refunded, we see banks reimbursed 59.3% of requests this year compared to 63.9% last year – a 7% shift.
Considering the new PSR reimbursement rules were just about to take effect, it is somewhat surprising to see banks holding firm on existing refund policies.
Another interesting data point is that each of the eight APP scam types saw a decrease in cases. This is the first time we’ve seen this since 2020 (when data was first made available). Purchase and romance scams are the two types that saw consistent, and significant, increases year-over-year. Breaking this trend is a huge achievement.
Digital banking: Slow and steady
In general, remote banking fraud (which includes digital banking fraud – internet and mobile – as well as telephone banking fraud) has seen a decrease in both cases (-12%) and losses (-2%).
We see that while internet banking fraud continues its positive trend (six consecutive half-year periods with decreases in numbers, leading to an 88% decrease in case volumes since H1 2021), mobile banking fraud keeps growing in both cases and losses.
Fraudsters continue to shift their attacks to mobile banking channels. Two-thirds of all digital banking fraud in the UK is now executed here, up from 15% in 2020. The digitalisation of the banking world, accelerated by the COVID pandemic, is surely a factor in this.
When we analyse the losses, however, we see that only one-third of money lost to fraud in the UK originates in the mobile channel. In other words, fraudsters continue to prefer (non-mobile) internet banking sessions for their higher-value cases, and banks should remain alert of both channels.
A positive result, or is it?
Digital banking fraud is down, and every scam type has decreased in volume. A logical assumption, therefore, would be that the fraud landscape is in a healthier place than it was 12 months ago. And while losses declined by 1.5%, the UK Finance report shows a 16% increase in overall fraud cases.
The question to be asked then is: Where’s the fraud going? The answer lies in the non-digital space.
One notable change in the report is the significant increase in card fraud. Case volumes have increased by almost 20%, with losses up 7%. This represents one of the biggest year-over-year increases in card fraud in several years.
We’ve seen several customers, both in the UK and elsewhere in Europe, targeted by fraudsters getting creative with their modus operandi, likely out of frustration with their lack of success making payments via digital channels. One such example is digital wallets. Fraudsters use mobile banking to extract victim information and complete the process of enrolling cards in Apple Pay or Google Pay.
What’s next?
These numbers suggest a changing landscape, but to what extent, only time will tell. The introduction of mandatory reimbursement is such a significant change that it’s impossible to tell what will happen next, so fraud fighters should remain alert. When we get our next set of data, we’ll finally be able to see some of the impacts.
