Most fraud now has some online element, and online scams have been more sophisticated. Data from ONS in 2022 stated that 61% of fraud incidents were cyber-related, affecting up to 4.5 million people and may be attributed to behavioural changes during the coronavirus (COVID-19) pandemic and an increase in online activity.
According to Barclays, over 70% of frauds now take place online via dating apps, online markets, and social media. TSB bank stated that the major causes of this was due a rise in impersonation, investment, and purchase fraud instances.
Who are the Victims?
Through various tactics, scammers often prey on vulnerable and lonely individuals of all ages, including the elderly who may have pension funds or retirement savings at stake. Older adults, in particular, can be targeted due to their potentially limited experience with technology and unfamiliarity with the ever-evolving methods employed by cybercriminals.
Also, people who need money or are short of cash are not left out, and the cost-of-living crisis has escalated the issue. Victims can also be businesses, organizations, and even governments.
Financial Losses due to Fraud
It is now impossible to overlook the scope of online fraud or the harm it does to businesses and individuals. Customers lost over £850 million between 2019 and 2021 and businesses lost £59.2 million to invoice and mandate scams in Q1 of 2021 alone.
According to UK Finance, the total fraud loss in 2020 totalled £1.26 billion (45% from payment cards, 38% from authorised push payments, 16% from remote banking and 1% from cheques), while unauthorised financial fraud loss came to £783.8 million.
TSB's research showed that 32% of respondents would struggle to provide their families with food if they lost just £500. Also, it was discovered that fraudulent listings on Facebook Marketplace had doubled, while impersonation frauds on WhatsApp had increased thrice in a year.
With banks facing an influx of scams, Liz Ziegler, Lloyds Banking Group's fraud prevention director said, "With more than 70% of fraud starting with contact through the main tech platforms, these companies must be held responsible for stopping scams at source and putting things right for innocent victims," she said.
However, thanks to technologies and vigilant workers, banks were able to stop a potential theft of £700 million in the first half of 2018. When it comes to refunds, not all banks can afford to reimburse the victims, which can cost the bank customer loyalty.
Funds Reimbursement
Financial institutions have a duty to protect their customers. Many banks have signed up to the Contingent Reimbursement Model Code (CRM), which aims to assure Authorised Push Payment (APP) scam victims that they would be reimbursed if they act accordingly.
The UK Finance data showed that 56% of total funds lost to fraud was returned to customers in the first half of 2022. TSB claimed that it has reimbursed 97% of its fraud cases with its TSB's Fraud Refund Guarantee and urges other financial organizations to do the same, as the average reimbursement in the banking sector is 42%.
Yvonne, a member of Parliament for Makerfield stated, "We need a strong regulatory framework, with online platforms given a legal responsibility for preventing scam content from appearing and for taking quick action to remove harmful content when reported."
To combat scams and fraud, the UK government has put a ban to the sale of financial products via cold calling. However, more needs to be done. The Online Safety Bill is a perfect opportunity to address the fraud and scam issue, but the UK Parliament has been sitting on this bill for over a year, while people keep getting scammed.
The government must ensure that the bill contains the most robust consumer protections and is swiftly voted into law to make a crucial advancement in the battle against fraud. Overall, it is important for all internet users to stay vigilant and adopt security measures to protect themselves against online fraud and scams.
