Over £600 million was stolen by criminals through authorised and unauthorised fraud in the first half of 2022. This is down 13% compared to the same period in 2021.

According to the 2022 half year fraud report from UK Finance, APP fraud accounted for £249.1 million of stolen funds. APP fraud is when criminals socially engineer their victims, usually with the intention of tricking them into authorising a payment to an account within their control. The report states that this remains a key focus method of criminals.

At the epicentre of this growing problem is ‘identity’. These scams typically involve consumers being duped into initiating payments to criminals posing as trusted contacts using stolen identities. They use fake websites, emails and phone numbers to bypass the typical security and authentication checks employed by banks and payment providers.

While the end of the pandemic has seen a fall in overall fraud loses, we need banks, businesses and fintechs to work together to tackle the fraud epidemic in the UK and hold criminals to account. If we don’t, the UK faces becoming the bank scam capital of the world.

Impersonation scams continually on the rise

One of the more pernicious forms of impersonation scams is the so-called romance scam where the criminals use fake social media accounts to target victims, forming friendships over several months before requesting money from the unwitting victim.

Despite there being an overall decrease in fraud levels in the first half of this year, instances of romance scams increased by almost a third. Romance scams have an average of over eight scam payments per case – meaning the individual is often convinced to make multiple payments over a period of time.

Another type of impersonation scam which has seen a rise of 10% in the first half of this year, is police or bank staff impersonation. This is where the criminal contacts the victim purporting to be from either the police or the victim’s bank and convinces the victim to make a payment to an account they control.

As many as 79% of fraud victims have experienced a negative emotional impact as a result of scams. While victims of romance scams are often left with anxiety, depression, low self-esteem and an inability to trust others or their own judgment.

Banks still losing millions

Banks have already invested heavily in their security measures such as strong customer authentication, preventing just under £584 million from being stolen in the first half of this year.

But they are still losing large amounts of money, paying out hundreds of millions of pounds to thousands of customers who have fallen victim for fraud since the APP voluntary code was introduced in 2019. For example, TSB has refunded 97% of all bank fraud cases under its Fraud Refund Guarantee.

While the figures may differ between banks, they all face the same impossible challenge – either absorb the losses of their clients or face losing those customers due to a lack of protection. And all amid a rapidly rising source of fraud.

The government has also said it will legislate in the upcoming Financial Services and Markets Bill to enable the Payments Systems Regulator to require banks to refund victims of APP fraud. Banks could be on the hook for even more than the hundreds of millions they fork out each year.

Cross-sector action critical

UK Finance has used these findings to urge more cross-sector cooperation and action to tackle the criminals and reduce the instances of fraud. This type of approach has worked in other countries and it’s time for the UK to catch up.

Sweden launched its BankID in 2003 and it is now the largest electronic identification system in the country with a 94% usage rate among smartphone users with more than 6.5 million active users. It is owned and operated by several Swedish and Scandinavian banks.

A similar but independent BankID scheme operates in Norway which also acts as a utility, owned and operated by a number of banks.


Originally conceived as a way for consumers to log on to their online banking accounts, the system has expanded its scope as consumers increasingly conduct more transactions digitally. BankID is used for confirming online payments and even signing official documentation. The scheme has proved to be successful in reducing payment fraud from 1% to just 0.00042% of transactions.

It’s clear that banks and consumers need support to spot and prevent scams now, and the UK government and law enforcement can’t tackle this billion-pound issue through creating and enforcing legislation alone.

We urgently need cross-sector action to explore and invest in new technologies which can help prevent fraud.

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