Impersonation fraud losses rocket

The scale of criminal activity which leads to financial loss has been laid bare by UK Finance’s half year fraud update. In total £753.9 million was stolen through fraud, an increase of 30 per cent compared to the same period last year.

As banks improve their security measures, for the first time Authorised Push Payment (APP) fraud has overtaken other methodologies as the leading cause of financial loss, with a 71% increase in H1 2021 against H1 2020.

APP fraud is typically perpetrated by criminals impersonating trusted individuals and organisations in order to trick people into authorising a payment to an account controlled by a criminal. The criminals will send an messages via email, text and increasingly social media either requesting personal data and passwords and/or directing people to pay money to an account purporting to be legitimate.

Throughout the last 18 months, online retailers, postal delivery services, the NHS and government services have all been victim of the methodology with losses of £129.3 million, an increase of 123% on the same period in 2020.

Conveyancers have been dealing with this type of fraud for a number of years, often referred to as Friday Afternoon Fraud due to the time fraudsters tend to strike during completions.

A fraudster will contact the conveyancer, often by email, claiming to be on the other side of the transaction or from the vendor, advising that funds need to be transferred to a specific account. In many cases the emails can be cloned to look identical, or subtle changes such as the inclusion of an additional full stops or hyphens in the name mean they are not immediately picked up.

Conveyancers are mentioned specifically in the report under Invoice and Mandate Scams:

“This type of fraud often involves email interception or compromise. It includes criminals targeting consumers posing as conveyancing solicitors, builders and other tradespeople, or targeting businesses posing as a supplier, and claiming that the bank account details have changed.”

Despite a slight decrease in the number of cases and overall value of losses, Invoice and Mandate Scams saw a 17% increase in the value of losses in H1 compared to the 2020 average.

Lindsay Petzer, Key Relationship Manager from legal risk mitigation experts Lawyer Checker said,

“UK Finance’s findings that APP fraud is now the country’s most common type of scam is alarming but unfortunately not surprising.

“Everyday Lawyer Checker defends law firms against opportunistic fraudsters and we’ve also tracked worrying figures from the Solicitors Regulation Authority, who have issued a 125% increase in scam alerts in June 2021 when compared to June 2020.”

“A large proportion of the alerts issued by the SRA relate to email modification fraud and impersonation. Online fraudsters are criminally resourceful and will use unscrupulous methods to try and dupe not only individuals but businesses too, out of their funds.”

Commenting on the figures Katy Worobec, Managing Director of Economic Crime at UK Finance, said:

“Our latest figures show the sheer scale of fraud taking place in the UK and highlight clearly the need for coordinated action to address this threat. The banking and finance industry invests billions in advanced systems to try and stop fraud happening in the first place, but criminals are exploiting weaknesses outside of banks’ control to trick customers into making payments directly to them.”

“This is why we are calling for coordinated action and increased efforts from government and other sectors to tackle what is now a national security threat.”

“We recently announced that major technology companies are donating $1m of advertising to raise awareness of the Take Five to Stop Fraud campaign on their platforms which is an important step in helping to raise awareness among consumers of the threat.”

“Criminals continue to target customers with a variety of scams, often via online platforms, and it is only through coordinated action that we will be able to really make progress in addressing the problem.”

Last week was “Take 5 Week” promoting the campaign, back by UK Finance, to urge people to Stop, Challenge, Protect when asked for their information or money.

The full report can be read here: https://www.ukfinance.org.uk/system/files/Half-year-fraud-update-2021-FINAL.pdf

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