UK Finance, the bank industry group, reported that three million scams took place in 2022. And it is payment cards that are the most common associated product. There is however one positive metric. The amount of money stolen in 2022 is down by 8% on 2021. Total fraud cases also drop, by 4% from the previous year.
Another positive relates to investment fraud, down by one-third.
After card fraud scams, the most common type of fraud involves purchases.
Emma Lovell, CEO of the Lending Standards Board told RBI:
“Whilst we are pleased to see that efforts to prevent scams have resulted in a decline in the overall rate of APP scams, scammers still pose a significant threat to society.
Falling victim to a scam can have devastating long-term emotional implications. Reimbursement is only one part of the picture; it is vital that we don’t lose focus on the preventative measures that protect customers from the distress and turmoil scams cause – while halting the funding of these criminal enterprises. The CRM Code exists to ensure signatory firms protect their customers with procedures to detect APP scams, prevent them, and respond to them when they do slip through the net.
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Independent standards drive down volume of APP scams
“Despite scammers becoming more sophisticated by the day, the statistics have shown that firms are succeeding in reducing the number of successful scams, a key focus for those signed up to the CRM Code. We must continue to hold firms accountable by having independent standards in place to further drive down the volume of successful APP scams. Our priority remains focused on ensuring that the best protections are in place for customers, and we will continue to work closely with regulators and industry to ensure this happens.
The government has also indicated this month that it favours technology firms working together to stop scams at the source – potentially via a voluntary code. This is a positive step given there are multiple organisations involved in getting people to the point they press ‘pay’ during a scam. All players in the customer journey need to work out where the ‘danger spots’ are to understand the role they can play in stopping scams.”
Fraud levels highlight need for perpetual KYC checks
Keith Berry, General Manager of KYC Solutions at Moody’s Analytics, added:
“This recent story, warning the UK is losing £2,300 per minute to fraud, highlights the critical importance of implementing Know Your Customer (KYC) checks across financial services. Organisations need robust KYC processes to verify the identity of potential customers, ensuring any risk posed by fraudsters or bad actors is identified and dealt with.
In this instance, which highlights payment fraud, fintechs can handle large volumes of requests for services and process millions of transactions, which makes them an attractive target for fraudulent activity.
Fines: levied at faster rate and higher values than ever before
Regulators continue their rigour when it comes to tackling financial crime, as evidenced by the significant fines we have seen issued for failings in this area. Data from the Moody’s Global Risk Information Database (Grid) found that 60% of organisations had received fines of more than $10,000.
Fines are being issued at a faster rate and with higher values than in previous years. This is a clear indication of the focus and determination to address the issue, and it underlines the need for companies to have stringent KYC procedures in place.
Perpetual KYC checks are vital for businesses to prevent money laundering and fraud. With the cost to the economy, the potential for reputational harm, and large fines for non-compliance, there are strong incentives for businesses to execute thorough and effective KYC.”