FRAUD - THE FACTS 2021 THE DEFINITIVE OVERVIEW OF PAYMENT INDUSTRY FRAUD Sponsored byTHE DEFINITIVE OVERVIEW OF PAYMENT INDUSTRY FRAUD | FRAUD THE FACTS 2021 | 1 UK Finance is the collective voice for the banking and finance industry. Representing more than 250 firms across the industry, it seeks to enhance competitiveness, support CONTENTS customers and facilitate innovation. Introduction 4 UK Finance seeks to ensure that the UK is the safest and most transparent financial Trends & statistics 10 centre in the world – thus creating a hostile environment for criminals by working with members, law enforcement, government agencies, consumer groups and industry. Card fraud 18 Unauthorised debit, credit and other payment card fraud 19 We represent our members by providing an authoritative voice to influence regulatory Remote purchase (card-not-present) fraud 22 and political change, both in the UK and internationally. We also act as advocates Counterfeit card fraud 25 on behalf of members to both media and customers, articulating the industry’s achievements and building its reputation. Lost and stolen card fraud 26 Card ID theft 28 The Economic Crime team within UK Finance is responsible for leading the industry’s Card not received fraud 30 collective fight against economic crime in the UK, including fraud, anti-money laundering (AML), sanctions, anti-bribery, corruption and cybercrime. UK retail face-to-face card fraud losses 32 Internet/e-commerce card fraud losses 34 We do this by: Card fraud at UK cash machines 35 Card fraud abroad 36 • Managing the industry strategic threat management process, which provides an up-to-the- minute picture of the threat landscape. Cheque fraud 38 • Sponsoring the Dedicated Card and Payment Crime Unit (DCPCU), a unique proactive Unauthorised remote banking fraud 43 operational police unit with a national remit, formed as a partnership between UK Finance, the City of London Police, and the Metropolitan Police. Authorised push payment (APP) fraud 53 • Managing intelligence sharing through our Economic Crime Information and Intelligence Unit Purchase scams 58 and the Fraud Intelligence Sharing System (FISS) which feeds intelligence to police and other agencies in support of law enforcement activity. Investment scams 60 • Providing a single point of contact for companies suffering data breaches, to ensure Romance scams 62 compromised account information can be speedily, safely and securely repatriated to the banks. Advance fee scams 64 • Delivering national awareness campaigns (Take Five to Stop Fraud and Don’t Be Fooled) to Invoice and mandate scams 66 inform customers about threats and how to stay safe. This includes the Take Five Charter. • Informing commentators and policymakers through our press office and public affairs CEO fraud 68 functions. Impersonation: police / bank staff 70 • Implementing procedures between police and bank branches to prevent vulnerable people falling for fraud (Banking Protocol). Impersonation: other 72 • Assessing the impact of new technologies, legislation and regulation. Take Five campaign 76 • Publishing the official fraud losses for the UK payments industry, as well as acting as the definitive source of industry fraud statistics and data. 2 | FRAUD THE FACTS 2021 | THE DEFINITIVE OVERVIEW OF PAYMENT INDUSTRY FRAUD THE DEFINITIVE OVERVIEW OF PAYMENT INDUSTRY FRAUD | FRAUD THE FACTS 2021 | 3 tricking them into giving away their money But we need big tech companies to do more and personal or financial information. These to clamp down on the fraud being perpetrated INTRODUCTION scams are becoming ever more sophisticated, on their platforms. Nearly every scam now has using technology and the internet to make an online element, whether it is investment their approaches more convincing. This has scams promoted on search engines or money 2020 was a year of unprecedented challenges, as the Covid-19 pandemic translated into a continued rise in authorised mules recruited via social media. It’s clear the dramatically transformed our everyday lives and lockdown restrictions push payment fraud, where people are current legal and regulatory framework needs significantly impacted on the economy. convinced to transfer funds to a criminal to be updated to keep pace with the rapid themselves. growth in these online scams. Currently, the tech giants are not properly held accountable While families and businesses have struggled, Bank staff on the frontline have been working The banking industry introduced a voluntary for fraudulent content promoted on their the criminal gangs behind economic crime hard throughout the pandemic to protect Code in May 2019 which has meant more platforms. In some cases, these firms are even have been quick to capitalise from the customers from fraud and to help the police victims of these scams are reimbursed. UK being paid by the criminals to place scam pandemic by tailoring scams to fit our catch the criminals responsible. The industry Finance’s latest figures show £147 million of adverts on their platforms. It cannot be right changing lifestyles due to the pandemic. stopped £1.6 billion of unauthorised fraud losses were reimbursed under the Code in that online platforms are profiting from these These include impersonation scams that losses in 2020, equivalent to £6.73 in every 2020, accounting for 47 per cent of losses scams, while the rest of society is left to pay seize on people’s fears about the pandemic £10 of attempted fraud being stopped. The in these cases. We recognise, however, that the price. where fraudsters pretend to be from trusted Banking Protocol, the bank branch rapid the voluntary Code is not always working organisations such as the NHS or government response scheme that stopped £45.3 million as intended, with a lack of consistency in UK Finance is therefore calling on the departments. Criminals are also adapting of scams in 2020, is now being expanded customer outcomes and a lack of clarity government to include fraud and economic to the rise in online shopping and remote to include online and telephone banking. for signatories in how to implement it. We crime within the upcoming Online Safety Bill. working by impersonating parcel delivery In addition, the banking industry funded support calls for new legislation for Authorised This would require large tech firms to address companies, e-commerce platforms or Dedicated Card and Payment Crime Unit Push Payment fraud to provide clarity to vulnerabilities in their systems and stop broadband providers. In addition, criminals arrested over 100 fraudsters during the year, firms, deliver more consistent outcomes for consumers from being ruthlessly exploited by are recruiting ‘money mules’ to launder stolen including criminals involved in Covid-19 scams. customers and ensure that protections under criminals. We want to see online platforms funds by posting fake adverts on job websites the Code apply across the financial services take action at every stage to stop these scams, and social media, targeting those looking We also share intelligence on emerging threats industry. ensuring better protection for consumers, and for work or to earn easy money during the with law enforcement and across the banking less money for the criminal gangs responsible. pandemic. and finance industry. UK Finance’s Information However, we also need to focus on stopping and Intelligence Unit helped protect over 2.1 this fraud happening in the first place. Given Let’s be clear, these fraudsters are not cheeky million compromised card numbers in 2020. the rising threat posed by these scams, we chancers, they are organised, ruthless criminals The industry is also working closely with believe more must be done by all sectors to using sophisticated techniques to trick people the government on measures to strengthen address vulnerabilities in their systems that are out of their personal or financial information. the fight against fraud and economic crime, being exploited by criminals to target people. As a recent report by the Royal United including through the Economic Crime This includes everything from phishing emails Services Institute (RUSI) think tank highlights, Strategic Board jointly chaired by the home to data breaches, spoof phone calls and texts the links between fraud, organised crime secretary and chancellor. as well as scams advertised on social media and terrorism pose a significant and growing and search engines. UK Finance is working threat to our national security. The criminal However, the banking and finance sector is closely with the telecommunications sector Katy Worobec gangs involved use the proceeds of fraud to reaching the limits of what it can do alone. to mitigate this threat, including a successful Managing Director, Economic Crime fund other harmful and illegal activities such In recent years, we have seen the biggest initiative with the mobile phone industry UK Finance as human slavery or drugs trafficking, causing drivers of fraud moving outside the banking to block scam text messages and work with untold suffering and damage to our society. industry to other sectors, a trend that has only telecoms regulator Ofcom to prevent criminals It is therefore incumbent on all of us, across been exacerbated by the Covid-19 pandemic. spoofing the phone numbers of trusted the private sector, law enforcement and Criminals are increasingly evading banks’ organisations. government, to work together to tackle this advanced security systems through social threat. engineering scams that target people