Staggering scale of financial fraud EIGHT times higher than thought | UK | News

The true scale of payment fraud in the UK is around eight times higher than currently estimated by the banking industry, according to a new report by the All Party Parliamentary Group on Fair Banking. While banks and regulators have said that fraud through Authorised Push Payments (APP) stands at around £380million a year, the report calculates that these losses are, in reality, about £3billion per annum.

The report, sponsored by fraud recovery solicitors Richardson Hartley Law, also exposes how in the past five years banks have been slower to spot fraudulent activity on scam victims’ accounts. Phil Brickell MP, who prior to his election in July 2024 worked for more than a decade across a number of financial institutions tackling financial crime and corruption, said: “The findings of this report reconfirm my gravest fear – that fraud is one of the biggest challenges facing our country today. Banks spend billions of pounds every year trying to contain the problem. But given the prevalence of fraudsters on social media platforms, tech firms in particular need to go much further to protect consumers and businesses.”

To calculate the underlying value of APP fraud – whereby victims are typically manipulated into making real-time payments to fraudsters, often involving impersonation – the report took existing figures from the Payment Services Regulator and the finance trade body, UK Finance, as well as other anti-fraud groups such as CIFAS, and applied industry standard estimates for the proportion of fraud that goes unreported each year. Using these data points the APPG arrived at a figure of £3billion for the underlying loss to APP fraud each year, far higher than the figures of £341million and £460million put out by the Payments Services Regulator and UK Finance in their respective annual fraud surveys.

The report, Authorised Push Payment Fraud – Who Bears The Burden, officially launched at Parliament on today (April 2), also reveals for the first time how banks and PSPs are failing to identify and catch frauds in a timely manner, meaning their customers are making more, not fewer, payments to scammers for each case of fraud that occurs. In 2020 victims of all types of APP fraud were making an average of 1.6 payments to scammers in each case of fraud. By 2024 that figure had risen to 1.8 payments per case, a jump of 16% according to an analysis of figures from UK Finance.

Martin Richardson, partner at Richardson Hartley Law, which runs the website nationalfraudhelpline.co.uk, said: “The data on payments per case isolates a key performance metric for banks and PSPs, the requirement to identify and stop frauds in real time. The fact that it is going up rather than down strongly suggests that on this metric banks are not having more success in stopping APP fraud. They are having less.”

The trend with respect to payments per case is particularly stark for some of the most pernicious and damaging types of APP fraud such as romance scams. In this category the number of payments for each case rocketed from 5.5 in 2020 to 10.8 in 2024, a near doubling in just four years. Similarly with investment scams the average number of payments made to fraudsters rose from 2.4 to 3.6, a rise of 46% over the same four year period.

The report calls for all parties to do more to tackle APP fraud, noting how only 2% of police resources are dedicated to tackling fraud dispute it accounting for 40% of UK crime. Equally, social media companies have a key part to play with four out of ten scams now involving the three main Meta platforms; Facebook, Instagram and WhatsApp.

Martin Richardson added: ‘We knew from our own experience of dealing with thousands of fraud recovery cases that significantly more than £400m was being lost to APP fraud each year. Even so, it is shocking to think that around £3b is lost every year to this type of payment fraud. We see the human misery caused by the fraudsters on a daily basis. Lives are being ruined financially and emotionally. We’ve dubbed it a ‘scamdemic’ and much more needs to be done to protect the public.

“Our fear is that as scammers adopt more technology this figure is only set to rise. Everyone needs to do more. This can’t just be left to the banks. We have become too accepting as a society that we are constantly being targeted by fraudsters.”

Visit nationalfraudhelpline.co.uk for more information