Financial Crime World

UK Loses £1.2bn to Bank Fraud in 2022: Most Common Types, Culprits, and Government Response

Authors: Tom Espiner and Daniel Thomas, Business Reporters

Date: May 10, 2023

!Getty Images(Image Source: Getty Images)

Overview

In 2022, the United Kingdom witnessed a substantial loss due to bank fraud, amounting to £1.2bn, as reported by UK Finance. This equates to around £2,300 lost every minute. Approximately three million scams were reported last year, representing a 4% decrease compared to 2021. This substantial figure underscores the need for heightened awareness and effective countermeasures against bank fraud.

Key Findings

  • The UK lost £1.2bn to bank fraud in 2022.
  • Three million scams were reported, down by 4% compared to 2021.
  • Payment card fraud was the most common type, accounting for the majority of cases.
  • Only 59% of losses were refunded by banks.

Types and Extent of Bank Fraud

Payment Card Fraud

Payment card fraud was the most pervasive form of bank fraud and accounted for the majority of cases.

Authorized Scams

Another significant category of bank fraud was authorized scams, where victims willingly transferred funds to scammers. Banks did not cover these losses, and only around 59% were refunded. This resulted in £285.6m of the £485.2m stolen being refunded voluntarily.

Fraudulent Purchases

Bank fraud cases involving purchases were the second most common type.

Romance Fraud

There was also a surge in romance fraud, with scammers pretending to be romantically interested in their victims to extract money.

Culprits and Concerns

Criminal Groups, Drugs Gangs, and State-Sponsored Bad Actors

The primary instigators of bank fraud are believed to be criminal groups, drugs gangs, and even state-sponsored bad actors.

Growing Concerns About Artificial Intelligence in Fraud Schemes

UK Finance CEO, David Postings, expressed concern over the growing use of artificial intelligence (AI) in fraud schemes. Scammers could potentially use AI to impersonate people more effectively, automate fraudulent activities and generate convincing scams.

Government Response

The UK government has introduced a new national fraud strategy to help combat these issues. Some of the measures included in the strategy are:

  • Allowing banks to delay payments from being processed for longer, enabling them to investigate suspicious transactions more effectively.
  • Banning cold calls selling financial products to help curb scams at their source.

Industry Response

Tech UK, an industry group, responded that technology firms were already taking measures to prevent fraud and should not be solely responsible for covering the losses.

Conclusion

With the ever-evolving landscape of bank fraud and the increasing threat of AI-driven scams, it is crucial for individuals, financial institutions, and governments to remain vigilant and proactive in implementing effective countermeasures. The new national fraud strategy signifies a strong commitment toward protecting citizens against such fraudulent activities.