UK Finance Annual Fraud Report

UK Finance’s latest figures show that Authorised Push Payment (APP) fraud, has fallen by two percent to just over £450 million 2024 with case volumes also falling by 20% - the lowest figures for cases and losses since 2021. However, other types of fraud, have increased with the most significant area of growth across all fraud categories being remote purchase fraud.

The Report calls out the importance of action from other sectors. UK Finance recognises that the financial services sector spends more than anyone else on combatting economic crime, including fraud and asks other sectors to step up and stop the criminal activity. In 2023, 76% of APP fraud cases originated from online sources and a further 16% from telecommunications but despite this, the sectors are not involved in reimbursing victims. UK Finance say this needs to change and a “cross-sector approach is crucial”.  

Mandatory reimbursement for APP fraud came into effect on 7 October 2024. By 2024 year-end, 8% of eligible APP scam losses were returned to victims. While it is unclear what impact the new reimbursement rules have had on fraud activity, some signs indicate fraudsters are pivoting to international payments instead.

It is noted that reimbursement is only part of the solution. The data can only show the value attributed to unauthorised fraud (as it is not possible to capture, for example, where a customer abandons a payment because of effective warning messages). In 2023, £1.2 billion of unauthorised fraud was prevented (7% increase on 2022). On reimbursement for APP fraud, the data shows that reimbursement rates rose across almost all categories of APP fraud in 2023 – and these rates are expected to continue to rise when the mandatory reimbursement comes in later this year.  

The Report notes the changes in the way people accessed banking services during the pandemic meant criminals altered the ways in which they targeted victims. However, the data now shows that losses across the fraud types captured by UK Finance have reverted to pre-pandemic trends (e.g. lost and stolen cards which dropped sharply during lockdown, have returned to pre-pandemic levels).  

Unauthorised fraud losses were £708.7 million in 2023 (down 3% from 2022). Some of the factors which are thought to have contributed to this overall reduction include (1) lenders increasing expiry periods on cards meaning fewer cards are in transit (so fewer cards available to steal), (2) additional activation procedures when cards are received, and (3) the requirements for Strong Customer Authentication. However, increases were seen in unauthorised mobile banking fraud which is considered to be due to the increased use of mobile banking apps. 

Whilst APP fraud losses have decreased, the number of cases has increased. Purchase scams have significantly increased and despite many online platforms offering secure payment options, criminals are tricking victims to pay via a bank transfer. Investment scams have reduced with UK Finance putting this down to the cost of living. However, these pressures are expected to reduce in 2024, and with the media attention around cryptocurrency prices, UK Finance expects these scams to increase. There has been a reduction in impersonation scams (e.g. fraudsters claiming to be from the police or bank staff) – this is considered likely to be down to the extensive education campaigns.

The Report references the fact that many countries are experiencing an increase in most types of fraud, especially scams. For example, Australia is called out as a country with a population of just 26 million people, it recorded AUD 3 billion in APP losses.  

The Report emphases that while AI is playing a growing role in fraud prevention there is potential for it to perpetrate fraud. The Report refers to Agentic AI as an emerging threat which could see criminals automate and scale fraud. In response, behavioural anomaly detection and real-time intelligence sharing are becoming pivotal in combating these evolving fraud tactics.

The Report emphases that while AI is playing a growing role in fraud prevention there is potential for it to perpetrate fraud. The Report refers to Agentic AI as an emerging threat which could see criminals automate and scale fraud. In response, behavioural anomaly detection and real-time intelligence sharing are becoming pivotal in combating these evolving fraud tactics.

The Report has emphasised the importance of the split liability component of the Mandatory Reimbursement rules incentivising continuous innovation in fraud prevention and detection across the financial services sector. Firms are expected to maintain continuous adaptability via real-time data sharing, cross-sector collaboration and rapid response to emerging fraud trends.