Katy Worobec, Managing Director, Economic Crime, UK Finance

A new survey has revealed the huge extent of the UK’s payment fraud problem.
UK Finance’s annual report into the UK’s payment industry, called Fraud the Facts 2019, reveals that last year £1.2 billion was stolen through fraud and scams. Unauthorised fraud was up 16% on 2017, with losses totalling £844.8 million. Authorised push payment scams resulted in gross losses of £354.3 million. Banks and card companies prevented £1.66 billion in unauthorised fraud, equivalent to £2 in every £3 of attempted fraud being stopped. Remote banking fraud losses, made up of internet banking, telephone banking and mobile banking, were down by 2%, but mobile banking fraud specifically increased 20% from 2017.

“Fraud is a threat that the finance industry cannot tackle alone,” said Katy Worobec, Managing Director, Economic Crime, UK Finance. “As this report shows, data breaches at third parties continue to be a major contributor to fraud losses. There were a number of high-profile incidents in 2018, many targeting well-known brands, where customer data was stolen. Whether it’s at a retailer, utility company, transport provider or elsewhere, the theft of personal and financial data can both directly lead to fraud losses or be used by criminals as part of their scams. The data can be used for months and even years after the breach takes place.”

“With a colossal £1.2 billion in losses, it’s undeniable that fraud still poses a major problem to banks and financial institutions,” commented Sam Bakken, Senior Product Marketing Manager with cybersecurity player OneSpan. “But it’s not all doom and gloom. Fraud prevention technology, including innovations in adaptive authentication, biometrics and behavioural techniques, enhanced by AI and machine learning, has seen huge improvements over the last year, so it’s certainly encouraging that banks stopped two-thirds of unauthorised fraud attempts in 2018.”

For banks and financial institutions, he claimed the report offers food for thought on two accounts: “Firstly, given the explosion in mobile banking, the increase in this type of fraud is perhaps not wholly surprising,” he said. “As banks get better at identifying fraud in the telephone and web banking channels, this suggests criminals are making an economic decision to pursue what are typically softer targets – mobile banking apps for example. Banks need to respond in kind to attackers’ allocation of resources and make investments of their own, because mobile threats will only become more dangerous. Banks and financial institutions must ramp up their efforts in securing the mobile channel, with the likes of mobile app shielding technology to secure and proactively protect individual banking apps from increasingly innovative threats and malware. In addition, gaining more visibility into mobile users’ devices and behavior through behavioral biometrics and other contextual data also helps shore up a bank’s defenses against mobile fraud.”

Secondly, said Bakken, regular data breaches that expose personally identifiable information across the web are a major contributor to fraud losses: “However, we’re seeing huge developments in the methods used for verifying the identity of someone conducting remote digital transactions,” he added. “For example, more and more banks are implementing risk analytics, that analyses thousands of transactions in real time, alongside device, geographical and behavioural data, to build up a profile for a customer to identify potentially fraudulent transactions. So, whilst third party breaches may be out of a bank’s control, they have the ability to better detect the types of fraud made possible with compromised data.”

UK Finance is the collective voice for the banking and finance industry. Representing more than 250 firms across the industry, it seeks to enhance competitiveness, support customers and facilitate innovation.

by Guy Matthews
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