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Beware - £1.3 billion lost due to financial fraud and scams

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Fraudulent financial crime and scams are increasing every year, with criminals becoming more sophisticated in how they are targeting victims.

UK finance’s latest annual fraud report shows £1.3 billion was stolen last year through authorised and unauthorised fraud. We examine some of the areas where fraudsters are targeting consumers and businesses.

Unauthorised fraud

A total of £730.4 million was stolen through unauthorised fraud in 2021. This is where permission is not granted by the account holder for the criminal to take their funds.

Victims are typically legally protected to this financial loss; figures have detailed that 98% of these cases receive a refund from the fraudulent activity on their account. The banking and finance sector prevented an additional £1.4 billion from unauthorised fraud last year.

Authorised fraud

Authorised push payment (APP) fraud is where a person is coerced or tricked into authorising a payment to an account managed by the criminal. It covers a number of areas, including investment scams, impersonation fraud and romance schemes.

A total of £583.2 million was stolen last year through a total of 195,996 reported APP scams. By value, that was 39% higher than the previous year, and 29% by number. Looking at the type of scam more closely reveals where people are being caught out most frequently.

Impersonation scams

Fraudsters can impersonate a range of organisations and institutions such as the NHS, HMRC, telecom companies, energy suppliers and banks. Victims can be targeted via websites, text messages, phone calls and, increasingly, social media posts.

A total of £214.8 million was lost to impersonation fraud last year, of which £137.3 million was attributable to the fraudster impersonating the police or a bank, up 51% on 2020.

Remember - we never ask for your full log-in details over the phone or email. If you’re ever contacted by Paragon asking for these details, please do not give any information and call us to report it.

Investment scams

Investment fraud resulted in £171.7 million in losses, up by 57%. With the increase of financial advice via social media platforms, individuals are more trusting with the financial advice they receive from unqualified people who could easily persuade their victims, posing as someone who is there to help. Alternatively, scammers are fraudulently using well-known names – from Martin Lewis to Ed Sheeran – to dupe people into parting with their money.

Have a look at our recent blog on how criminals are using famous faces to trick consumers for their financial advantage.

Purchase scams

Purchase scams increased in 2021 by 25%, with a loss of £64.1 million. This is where a victim is targeted through online advertising and the product they’re buying doesn’t exist! When clicking on an advertisement on Instagram or Tiktok, for example, ensure you’re dealing with a legitimate company and stay vigilant.

Romance Scams

Romance scams increased by a significant and worrying 73%, totalling £30.9 million stolen. This is where a criminal targets their victim via a dating app or befriending them on social media, using persuasive and manipulative tactics to groom their victims into sending them money.

For more detail on this scam, have a look at our blog.

CEO fraud

CEO fraud saw the biggest jump in fraudulent activity within the APP category, with a 165% increase in cases resulting in a financial loss of £12.7 million in 2021. This where a person falls victim to an impersonation of a senior company executive, employees are typically targeted by the criminal and tricks them into thinking they are speaking to their CEO.

What action can you take?

To help protect yourself, have a look at Take Five, a campaign introduced and managed by UK Finance. The campaign is simplified in three steps - Stop, Challenge and Protect.

The national campaign aims to educate and offer advice to help everyone stay safe from financial fraud.

Remember, as a bank we will never send you an email or text message which asks you to login to your account.

For more information on how to protect yourself, visit our Security webpage.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551