Digital Scams Outpace Defenses in Data and Technology

The scale of digital scams we are finding is bigger than we could have imagined. Whilst the Authorised Push Payment (APP) reimbursement scheme brings more information on typologies, we are discovering that we still lack the real-time data and technology to make a significant impact in detection.

The implementation of the APP reimbursement scheme has led to a notable increase in reported scam incidents.

In 2024, only about 20% of scam cases were reported, leaving a significant portion unaddressed and typologies unclear. This underreporting is often due to victims feeling embarrassed or believing that reporting would not lead to any recovery of their losses.

With the introduction of the APP reimbursement scheme, and a concerted effort to educate the public about various scam typologies and the importance of reporting incidents, awareness has increased and more individuals are coming forward. In particular, the awareness campaigns are reducing the stigma associated with being scammed, which is one of the key drivers of underreporting.

Consequently, financial institutions and regulatory bodies now have access to more comprehensive data, enabling them to develop more effective strategies to combat fraud. On the other hand, the payouts by banks are increasing significantly, which is requiring renewed capital support from the government to continue.

For instance, the Payment Systems Regulator (PSR) reported that in 2023, victims noted 252,626 cases of APP scams totaling almost £341 million. This represents a 12% increase in the number of cases compared to the previous year, indicating that more victims are coming forward to report scams.

Furthermore, the UK Finance annual fraud report revealed that authorised push payment (APP) fraud losses were £459.7 million, down five per cent compared to the previous year. This comprised £376.4 million of personal losses and £83.3 million of business losses. The total number of APP cases was up 12 per cent to 232,429.

There are both negative and positive results here. Technology and data sharing will play a key role on the international stage as more scams are reported, enabling financial institutions to better understand the scope of fraudulent activities and implement measures to protect consumers.