As fraud rates continue to rise, nearly all adults in the UK (94%) now say they are taking additional steps to avoid falling victim to scams, according to new research from global fraud and financial crime prevention company, Featurespace.
Three in ten (30%) UK adults have been a victim of financial fraud, and more than half (55%) have seen an increase in the number of scam attempts in the last 12 months.
Data from the National Crime Agency shows that fraud is now the most common crime in the UK, accounting for 40% of all offences recorded in England and Wales. Almost £1.2 billion was lost to fraud in the UK last year, with Authorised Push Payment (APP) fraud a significant contributor to this – UK Finance’s 2024 Fraud report shows a 12% jump in the number of APP cases in 2023, with total losses amounting to £459.7 million.
The study reveals evidence of social stigma around financial fraud. Despite the scale of the issue, victims aren’t speaking openly about it – only a fifth (20%) of people who have been a victim of a scam say they go on to speak to their friends and family about how they can protect themselves in similar situations, and one in seven (13%) decided not to report the scam because they felt embarrassed or ashamed.
Banks are conscious of the role they must play in recovering customer funds after scams, and the impact it has both financially and emotionally for scam victims. Two-thirds (68%) of people who have been scammed say they are happy with the level of support provided by their bank.
As scams become more complex, almost six in ten people (57%) appreciate banks providing additional information on safeguarding against financial fraud and scams – this type of information can be supported by the banks’ use of cutting-edge technology to provide additional intelligence and more sophisticated scores.
In addition to boosting consumer awareness of what scams look like, banks are also embracing technology that can help to fight the rise in fraud and ensure consumers are protected before the scam occurs.
Featurespace recently announced the results of a major pilot with Pay.UK, the independent, not-for-profit operator of the UK’s national retail payments system, to protect UK consumers from APP fraud.
The overall pilot exceeded expectations with participants’ results showing an average uplift of more than £112m worth of additional fraud detected in a year – Featurespace significantly outperformed this average, achieving an uplift of £138.7 million demonstrating how significant improvements in fraud detection is possible at a national level through a consortium approach.
Martina King, CEO at Featurespace, said: “The UK is in the midst of a fraud epidemic and millions of people across the country are having to think twice and become more cautious in their daily lives to try to avoid scams.
“While these criminals have a wide range of tools at their disposal, and access to our identities in many cases, the good news is that the industry has a wealth of behavioural data within our banks that can be used to spot signs of fraud before it happens. This data is our superpower, and it is how we will turn the tide on fraud – by using AI for good.
“Banks across the UK have been harnessing this data and using AI and Machine Learning technology for good for over a decade. By creating an anonymised profile of an individual in real-time, we can use the good behaviour (of which there is significantly more), to identify and stop unusual, potentially fraudulent bad behaviour in milliseconds, protecting banks and their customers from fraud. The recent Pay.UK proof of concept demonstrates that when banks share intelligence amongst the group, the positive impact on reduction of loss for consumers is striking.”
Featurespace has built a model optimised for real-time data analytics, capable of recalibrating in real-time to identify and prevent both existing and new forms of fraud.
Last year, Featurespace’s solution improved NatWest’s scam detection rate by 135% and reduced false positives for scams by 75% – enabling genuine transactions to be processed quicker, saving both costs and processing time.