Fraud losses due to people being tricked into transferring money directly to criminals jumped by 39% year-on-year in 2021, according to figures from an industry trade body.
Some £583.2 million was stolen through authorized push payment (APP) fraud last year, UK Finance said.
This was a 39% increase compared with £420.7 million-worth of APP losses recorded in 2020.
APP losses were split between personal (£505.8 million) and non-personal or business (£77.4 million) customers.
Nearly 40% of APP losses last year were due to impersonation scams.
Money was also lost due to purchase scams and investment scams, with invoice and romance scams also among the range of frauds.
A total of £271.2 million of losses was returned to victims of APP scams, accounting for less than half (47%) of losses.
UK Finance recorded 195,996 incidents of APP scams in 2021. Of this total, 188,964 cases were on personal accounts and 7,032 cases were on non-personal accounts.
Criminals impersonated a range of organizations such as the NHS, banks and government departments via phone calls, text messages, emails, fake websites and social media posts to trick people into handing over their personal and financial information, UK Finance said. They used this information to convince people into authorizing a payment.
Many banks have signed up to a voluntary code on APP scams which reimburses people in cases where neither they nor their bank is to blame. However, there have been concerns that the code is not always applied consistently.
The Government has previously said that the Payment Systems Regulator (PSR) will be able to require banks to reimburse APP scam losses under measures in the Financial Services and Markets Bill.
Banks can also sign up to a “159” pilot scheme, an initiative which encourages consumers to hang up on a phone call that might be a scam and to dial 159 to speak to their bank.
Looking specifically just at cases dealt with under the voluntary code, 51%, or £238.1 million of losses, was returned to customers last year, the report said.
In total, more than £1.3 billion was stolen through fraud and scams in 2021, UK Finance said.
Unauthorized financial fraud losses across payment cards, remote banking and checks totaled £730.4 million in 2021, a decrease of 7% compared with 2020.
UK Finance added that the banking and finance industry prevented a further £1.4 billion of unauthorized fraud from getting into the hands of criminals last year – equivalent to 65.3p in every £1 of attempted unauthorized fraud being stopped without a loss occurring.
It said it has long been calling for greater cross-sector action to tackle scams and it will continue working with the Government on upcoming legislation in this area.
Katy Worobec, managing director of economic crime at UK Finance, said: “Unauthorized fraud losses fell last year, but this type of criminal activity remains a major problem.
“Through the introduction of new measures such as strong customer authentication, coupled with continued investment in technology, the banking and finance industry prevents significant amounts of fraud from taking place.
“Authorised fraud losses rose again this year as criminals targeted people through a variety of sophisticated scams, with much of the criminal activity taking place outside the banking sector, often involving online and technology platforms.
“This is why we continue to call for other sectors to play a greater role in helping protect customers from the scourge of fraud.
“The upcoming Economic Crime and Corporate Transparency Bill is an important development and provides the opportunity for the government to give new powers on information sharing and tracking stolen money.
“These are things we have long called for and will support efforts to work together and stop the fraud happening in the first place.”
UK Finance is urging customers to follow the advice of the Take Five to Stop Fraud campaign, and remember that criminals are experts at impersonating people, organizations and the police.
They will spend hours researching people for their scams and may try to pressure people into making a decision they later regret.
People should contact their bank immediately if they think they have failed for a scam and report it to Action Fraud.
Emma Lovell, chief executive of the Lending Standards Board (LSB), which oversees the voluntary APP scams reimbursement code, said: “The key question all sectors and industries should be asking is how can we stop APP scams occurring in the first place?
“No-one should be out of pocket because of criminal activity. Evidence shows scams impact victims’ mental health, leaving long-lasting feelings of guilt and shame.
“Reimbursement alone cannot reverse this damage, nor does it reverse the fact that the proceeds of scams often fund organized and other serious crime.”
Here is how various types of authorized fraud losses added up in 2021, according to UK Finance, and the annual percentage increase:
– Investment scam, £171.7 million, 57%
– Impersonation scam: Police/bank staff, £137.3 million, 51%
– Impersonation scam: Other, £77.5 million, 39%
– Purchase scam, £64.1 million, 25%
– Invoice and mandate scam, £56.7 million, minus 17%
– Advance fee fraud, £32.1 million, 45%
– Romance scam, £30.9 million, 73%
– Fraud CEO, £12.7 million, 165%