UK Finance recently reported a total of £503 million was stolen by criminals through authorised and unauthorised fraud in only the first six months of 2018 – and that doesn’t even account for the £705 million of fraud that was prevented during this same time-frame.
With this newly-collected data, purchase scams – where a consumer pays in advance for a product or service - topped the charts, and when it came to authorized push payment (APP) scams, they account for two-thirds of the cases. It is clear that Authorised Push Payment - whether through malicious payee or redirection scams - is the motivation of growing preference for the Fraudster. With last week’s announcement on the rules and standards for the Confirmation of Payee service, this presents a step in reducing the potential for APP scams linking the account name to the account number and sort code.
However, unauthorised fraud still accounts for over two-thirds of the reported fraud with an increase in reported cases compared to 2017 (1m reported cases in 2018). Fortunately, the total number of unauthorised fraud saw a slight YoY decrease over the same period in 2017, which can be credit to the increased awareness and education being driven by campaigns – such as the Take Five to Stop Fraud campaign – led by UK Finance and its members.
Now, with the introduction of PSD2 and Strong Customer Authentication, I do wonder how ready the industry is to migrate and manage their existing customer base to newly incorporated authentication methods to comply with regulations but also to help prevent any additional fraud loss. With the customer experience top-of-mind, the questions becomes: How do I prevent fraud, with minimal known impact to my customers?
With a sizeable opportunity for the Fraudster to target your existing customers, banks need a combination of tools and technology; and most importantly education for the consumer and industry collaboration.
Technology vendors (and not just start-ups) can help with providing part of solution but FIs should look beyond the shiny demo. Experience and longevity are sometimes forgotten in today’s world, but there are organisations who can bring you the right, new technology- with the experience to support the needs of the industry. At a previous organisation, I asked a client why they selected my product and company. The answer was easy for him – “if I have a problem at 3am on a rainy Tuesday morning next year, who will be there to support me?”
In the end, you will receive what you pay for, so make sure the solutions and vendors you choose will be there beyond September 2019, and that you do not simply become a logo for their Investor or Board pack.