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Banking fraud

Published Monday, July 22, 2019

This briefing answers frequently asked questions about banking scams, and describes: the scale of the problem; the types of scam; what help is available for victims; and, government and industry action.

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Criminals successfully stole £1.2 billion from individuals through banking fraud and scams in 2018.[1] Businesses and the public sector are estimated to lose around £5.9 billion per year.[2]

Most fraud targeted at individuals is conducted via unauthorised payments from payment cards, remote banking and cheques. Victims of this type of fraud can often get the money back from their bank, depending on the circumstances of the loss.  

However, a significant amount of fraud in 2018 was also via authorised payments. This is when the victim is tricked into transferring the money to the criminal.

In these cases, victims were much less likely to recover their losses. In 2018, only 23.3% of losses from authorised payments (£82.6m) was returned to victims. This was either by a full or partial refund directly from the bank or when the funds were recovered from the recipient bank.

A code of practice introduced in May 2019 gave a commitment, from all firms who sign up to it, to reimburse victims of authorised payment scams in any scenario where the customer has met minimum standards expected of them under the code.[3]

Police response

The City of London Police leads the police response to fraud. They are home to two national units (Action Fraud and National Fraud Intelligence Bureau) where fraud cases are reported and analysed. If these units believe there is enough evidence, they will allocate cases to a local police force for investigation.

The police response to fraud has come under much criticism. There are concerns that a high number of cases do not reach the threshold for investigation and that those that do rarely result in offenders being bought to justice. Various stakeholders have called for better co-ordination across the police to improve service to victims and the quality of investigations.

Advice for victims of fraud

Victims of banking scams should consult the Action Fraud website, which:

  • allows victims to report fraud to the police;
  • describes what victims need to do should they become a victim of this crime;
  • describes the different types of fraud;
  • gives practical advice to individuals and businesses on how to protect themselves.

The ‘Take Five’ website, which is a national awareness campaign led by industry and Government also offers advice to victims.

If a bank or service provider refuses to reimburse a victim of a bank scam, the Financial Ombudsman Service can investigate whether the bank took the appropriate decision.  

 

[1]FRAUD THE FACTS 2019: The definitive overview of payment industry fraud”, UK Finance [online], 21 March 2019 [accessed 8 April 2019]

[2]  Serious and Organised Crime Strategy, Cm 9718, November 2018          

[3]APP Scams Steering Group Agrees Voluntary Code”, APP SCAMS STEERING GROUP, 28 February 2019 [accessed 8 April 2019]

Commons Briefing papers CBP-8545

Authors: Oliver Bennett; Jennifer Brown

Topics: Consumers, Financial services, Internet and cybercrime, Police

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