Houston, we have a problem… APP & ATO fraud to top £100 million a month in 2022: 60% client loss

UK e-commerce spending hit a record £10 billion in July 2021. The year-to-date online spending was £65 billion, up 18% y-o-y and 56% on 2019.  Following this trend online fraud rate for faster payments and account take over fraud for 2021 could be £1 billion. If this trend continues the monthly running rate could top a £100 million by early 2022. Would this level of monthly fraud cause the banks and regulators to take action? 

Deposit fraud is now a hot prospect for scammers as the owner of the bank account, the payer, has control of that deposited amount. Deposits in the form of a refund are seen as fair game for the fraudster. That money, psychologically, can be seen as an unexpected gift. Fraudsters’ want part of that and used the ‘you have been overpaid’ to extract part of the refund and potentially much more if given access to cards and bank accounts. HMRC refund and demand scams are so common banks highlight HMRC name in the generic fraud warnings. 

The fraudster’s objective is to move this money from the deposit amount (the payer) into their account (payee). Here hacking and data breaches bring this sensitive information onto The Dark Web and available for purchase. Since 2020, 1.2 billion records have been hacked/beached and a new supply chain is underway: one fraudster sells the data and another buys and then uses the data their need for the scam.

All forms of communication can be involved by the fraudster  – texts, emails and telephone calls – including working with someone who claims to be the head of department.

Paying by faster payments, the fraudster preferred method of payment, the account Payee Name will probably not match that on the account. At this stage the fraudster explains the fact that 95% of the banking community does not use Confirmation of Payee (CoP). Then politely asks you to go ahead as the alternatives, such as debt collectors are unpleasant. All of course is fake, but fraudsters are convincing, and have sown doubt over the true ownership of that money.

The key to stopping refund frauds is to verify the incoming media as true. To do so the consumer and the corporate treasurer needs extra help to control the following:

Telephone calls – best not to answer unknown numbers but we have been conditioned to answer a ringing telephone. New technology needs to be used to interrogate the caller’s number before answering the call. Alternatively let an answering service take the call and the chances are high no message will be left as scammers are looking for ‘live’ contacts

Texts – as we have moved to online shopping it is estimated 70% of mobile phones have received texts from couriers requesting a small, £2.99 fee before the courier delivers the package. The payment of this fake text starts a fraudster telephone call urging you to move the remaining money to a safe account. Here technology is needed to verify incoming texts 

Email – the latest crop of scams are from lookalike web emails from known brands with slight but important change in the return email address. Few read the actual return address so interactive software is needed to confirm the address before responding. 

Financial fraud is not only a UK issue, in 2020 a survey of 40 consumer protection agencies worldwide reported frauds of £113 million from 50,000 cases averaging £2,300 per case. Yet in 2021 one country, Australia, reported £13 million in one month (July 2021) from 27,000 reports an average of £500 per case for July 2021.

To counter this overwhelming global grow in fraud, consumers and companies must have greater protection. Like the fraudsters themselves, anyone with a bank account needs to use technology and psychology of trust to prevent being defrauded.