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Authorised push payment (APP) fraud against businesses has risen 8% in a year with the majority of the UK’s payments industry believing this type of fraud is the most damaging
Businesses lost £83.3m through APP fraud in 2023, the highest amount since the pandemic. From 2022 there was an 8% increase in the total amount stolen, with the amount recovered falling by 2% to £30.8m.
In 2020 there was £73.3m stolen from businesses through APP fraud, with £27.4m recovered. By 2022, £77m was stolen through this method with £31.5m repaid to businesses.
Authorised push payment fraud is when the victim is tricked into sending money to a fraudster's account. This can be done by 'malicious redirection', such as a fraudster impersonating a staff member from a bank to transfer money across, a member of staff from a financial services company. Scammers may pose as a legitimate business or individual who is known to you, typically via email, to inform you that their bank account details have changed and to make a payment to the new account. The money is then transferred to an account out of the country, then withdrawn in cash.
Although the amount of money stolen through APP is growing, the number of cases has dropped by 2,000 since 2020 when there were 9,407 confirmed cases.
Thirteen types of fraud were outlined in the Payment Association’s Annual Fraud Report 2024, with APP fraud considered the most damaging with 27% of respondents agreeing on this.
Riccardo Tordera, director of policy for the Payments Association said: ‘APP fraud is in many ways one of the least sophisticated forms of fraud around – not much more difficult to fall for than the “friend in need” email and text message scams that were once common.
‘Often, APP fraud attempts can be as simple as a text claiming to be from a bank asking for funds to be transferred.
‘The problem stems from how many people a fraudster can target with that message: years of data leaks mean that bad actors can get tens of thousands of phone numbers for very little, and if a fraud attempt is only 1% effective, it could still cost hundreds of people thousands of pounds.
‘In short, it isn’t the sophistication but the scale of APP fraud that is most worrying.’
APP fraud losses for businesses and consumers in total hit £459.7m in 2023, which was 5% lower than in 2022. APP fraud against consumers fell by 8% to £376.4m
There has been a significant increase in APP fraud since 2020, with the total amount rising by almost 50,000 cases, valued at £30m. Of the £460m that was stolen in 2023 through this method, £287.3m was returned to victims, with £256.4m returned to consumers.
The Payment Systems Regulator (PSR) said in December that payment service providers are liable for any losses through APP fraud on their platforms. As a result 70% said they have implemented more measures to combat the issue. This includes re-evaluating customers based on risk and assessing transactions.
Tordera added: ‘Time will tell whether these measures will be enough. That said, the currently proposed repayment threshold is disproportionate.
‘Having to repay £415,000 could sink a small, innovative fintech company, so we would recommend a top upper limit of £30,000.
‘The average scam costs businesses £11,000, and members of the public £1,500, so £30,000 is still more than double the average scam for businesses and 20x the average scam for consumers. We are not contesting the principle of reimbursement, we just want this to align with the average scam.
‘The significant added pressure of these changes to the industry will illuminate competition and cause smaller PSPs – which consumers with more niche financial needs rely on – to fail.’
Losses through payment fraud overall through 2023 reached £1.17bn, with 2.97m confirmed cases, the equivalent of 64p being stolen for every £1 attempted.
However, this has been coming down since 2020, as the pandemic saw a huge rise in fraud cases. In 2020 the total amount lost through fraud was £1.2bn, rising to £1.31bn in 2021, and dropping to £1.21bn in 2022.
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