A new report detailing the facts surrounding the challenge of fraud in the UK, has been released by the collective voice for the banking and finance industry, UK Finance.

The Fraud The Facts 2022 report highlights that unauthorised financial fraud losses across payment cards, remote banking and cheques totalled £730.4 million in 2021.

Investment by the finance industry in advanced security systems to protect customers prevented more than £1.4 billion of unauthorised fraud, but criminals still successfully stole over £1.3billion through fraud and scams in 2021 with 40% of this attributed to payment card fraud. Interestingly, APP (Authorised Push Payments) saw a sharp rise in fraud, growing 39% as criminals continue to adapt the methods including social engineering, in which fraudsters groom and manipulate people into divulging personal or financial details or transferring money. Losses due to authorised push payment scams were £583.2 million in 2021. This was split between personal (£505.8 million) and non-personal or business (£77.4 million).

Total 2021 financial fraud losses by type % of total

The report continues to detail that 79% of card fraud on UK issued cards is conducted in Card Not Present (CNP) channels, as the Covid-19 pandemic saw criminals ruthlessly adapt and evolve their methods to take advantage of the continued increase in remote/homeworking.

Remote purchase (CNP) accounts for the biggest proportion of card fraud all card fraud cases reported involving the use of stolen card details to buy something on the internet, over the phone or through mail order. There was a slight rise in the number of cases involving remote purchase fraud in 2021, with an alarming 2.83 million reported cases and losses of £524.5m.

Whilst the amount of fraud lost through online channels reduced by 9% in 2021, MOTO (mail order/telephone orders) saw a 2% increase in fraudulent payments. With PSD2 SCA being introduced into the payment’s ecosystem for online transactions, it is hoped that fraudulent e-commerce transactions will continue to fall, however telephony payments via voice, IVR or DTMF become the weakest link in the chain, and it should be expected that a proportion of CNP fraud will shift channels into MOTO.

Card fraud losses 2021 split by type (as a percentage of total losses)

Steven Jones, Commercial Director at Gala Technology, the innovative Yorkshire-based company behind the secure and PCI DSS compliant "Cardholder Not Present' payment solution, SOTpay commented ‘Reading the report, we can take some positives that unauthorised financial fraud losses across payment cards, remote banking and cheques fell by 7% when compared to 2020, however there is still much work to do.

Steven Jones of Gala Technology

CNP fraud remains a large problem and although the losses may be lower than last year, the reported number of cases remained static with over 2.83m cases. Gala Technology predicted a rise in MOTO fraud, and we expect this to grow again this year. As strong customer authentication (SCA) is now live in the UK, it will become harder for fraudsters to commit crime via e-commerce transactions. The telephony channel is the weakest link, and the payment ecosystem, acquirers, payment gateways and ISO’s needs to work together to educate merchants that technologies such as SOTpay are a great way to negate the risk of fraud-related chargebacks, simplify PCI DSS requirements and often lower costs."

Katy Worobec, Managing Director, Economic Crime at UK Finance summarises within the report "Amid a rapidly changing landscape, 2021 was a year that more than ever highlighted the need for collaborative action to effectively address the epidemic of fraud in the UK. The lockdown may be over, but the enduring effects of the Covid-19 pandemic continue to have a significant impact on families and businesses across the UK. Fraudsters have become increasingly adept at adapting their methods to suit changes in our lifestyles and in consumer behaviour. We can only tackle this through effective coordinated action, and we need continued efforts from government and other sectors to tackle what is now a national security threat.

Katy Worobec of UK Finance

The challenges we face are clear. Criminal gangs, well-organised, ruthless and technology-savvy, are not going to be discouraged easily. They are systemically bypassing banks security measures by directing their efforts at the customer outside the payments journey. This highlights how important it is for different sectors to work together to fight fraud. It is an ever growing and persistent threat to businesses, consumers and the economy as a whole. The banking and finance industry continues to invest billions in tackling fraud. But it is only through this coordinated action that we will really be able to shift the dial."

You can download the entire UK Finance report here:

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