UK fraud losses overall fell by 8% to £1.2bn, driven by a 17% fall in authorised push payment (APP) losses. Specifically, APP fraud dropped to £485.2m in 2022, following a 39% rise the previous year.
While the efforts of Confirmation of Payee and tailored communications have been successful, more can be done to further eradicate payments fraud in the UK, argues Matt Cox, MD, EMEA, FICO.
Fraud teams are starting to feel the real benefits of new tools such as Confirmation of Payee. In summary, it helps to identify more scams. Fraudsters are now being more frequently identified before money has been sent. Moreover, the public is becoming aware of and comfortable with these approaches. When fraud protection provides a good customer experience people see it as benefit not a hindrance.
UK Finance examines the origination of scams, with 78% beginning online. Telecommunications represent a higher value however, with 44% of the value of losses originating here.
Says Cox: “Upstream polluters such as social media platforms must acknowledge their position as a starting point for many scams and take proactive measures.
“The influence of tailored communications has been powerful. As banks and other financial institutions increase what they know about each customer, they improve the messaging they can produce. These tailor-made messages are succinct and offer real solutions in real time and in the channel preferred by the customer. Clear lines of communication will prove vital to financial institutions in the coming months as new Consumer Duty rules become active in July.
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“Despite the progress, it’s clear there needs to be more of a concentrated effort to eradicate financial fraud in the country – UK Finance reported a total of over £1.2bn stolen last year, or £2,300 every minute.”
Leveraging Advanced Analytics
One key area is leveraging advanced analytics to improve fraud detection. In FICO’s recent report ‘The Evolution of Fraud Management Solutions’, 55% of enterprise fraud solution buyers cited adaptability to emerging fraud threats as their top priority.
Cox argues: “Fraud teams will benefit with the improved use of advanced analytics informed by billions of transactions from more than 9,000 contributing financial institutions.
“Additionally, with patented AI specifically targeting APP fraud and scams, organizations can more effectively mitigate the serious financial, legal and reputational risk they may incur if they fail to protect their customers. With improved use of advanced analytics, fraud teams will increase their likelihood of preventing types of APP fraud like purchase scams, which saw a 14% rise in volume with losses of £67m.”