5.Fraud “is now the second most common crime type in England and Wales, with nearly every individual, organisation and type of business vulnerable to fraudsters.” Greater Manchester Police Force defines fraud as “the volume crime of the 21st Century” and the Financial Ombudsman Service recently told us it had seen “significant growth” in economic crime cases.
6.There are two main types of economic crime affecting consumers: authorised and unauthorised payment fraud. UK Finance, a representative body for the banking and finance industry, defines these as follows:
Authorised fraud: In an authorised push payment (APP) fraudulent transaction, the genuine customer themselves processes a payment to another account which is controlled by a criminal.
Unauthorised fraud: In an unauthorised fraudulent transaction, the account holder does not provide authorisation for the payment to proceed and the transaction is carried out by a third party.
7.We heard evidence about specific scams which illustrate these two different categories of fraud. Authorised fraud (or APP Fraud) could include
8.These examples all require the consumer to authorise the payment themselves—the fraudster does not take over the consumer’s bank account.
9.With unauthorised fraud, the fraudster does take control of the consumer’s bank account and as such the consumer is very often unaware the payment has been made. An example given to us was when a consumer receives a phone call from a fraudster posing as their internet provider. The scammer convinces the consumer to give them remote access to their computer, allowing the scammer to access their bank accounts.
10.UK Finance collates figures on the levels of authorised and unauthorised fraud each year. In the first half of 2019, £408 million was stolen by fraudsters via unauthorised fraud and £208 million via authorised fraud. The total figures reported for 2018 were £844 million stolen via unauthorised fraud, and £354 million via authorised fraud, while in 2017 £731 million was stolen in unauthorised fraud and £236 million in authorised fraud.
11.There are also significant volumes of unauthorised fraud prevented by financial services firms. UK Finance report that banks and card companies managed to prevent £1.66 billion of unauthorised fraud in 2018, the equivalent of £2 in every £3 of attempted fraud. In the first half of 2019 the industry prevented £820 million of unauthorised fraud.
12.It is difficult to get an accurate understanding of the scale of consumer economic crime. UK Finance has cautioned that the authorised fraud figures are not directly comparable year on year as there are now more banks reporting and greater clarity around what an APP scam is. Megan Butler, Executive Director, Investment, Wholesale and Specialists Division at the Financial Conduct Authority (FCA), told us that:
There are a lot of different statistics out there that try to size this problem in different ways, but the consistent message that comes through, although the numbers do not necessarily reconcile terribly well, is that this is a significant problem, and it is growing.
13.The Government’s Economic Crime Plan, published in July 2019, states that “Economic crimes can involve complex methodologies that are continuously changing as criminals and terrorists identify and exploit new vulnerabilities in society.” Megan Butler of the FCA told us that growth in economic crime was often linked to technological developments, which allowed scams to progress quickly.
14.The speed at which economic crime can develop can be demonstrated by the FCA’s ‘Financial crime: analysis of firms’ data’ report. Published in November 2018, it did not mention APP Fraud. This is because when the FCA designed the survey they relied on outdated categories of economic crime, established before APP Fraud became the significant scam it is now.
15.It is clear, both in terms of financial losses and in the variety of scams suffered by consumers, that economic crime is a serious and growing problem in the UK. Trends need to be identified quickly. In order to ensure a clear picture of the scale and types of economic crime facing consumers, the FCA should publish data on economic crime within six months. It should evolve its data collection practices to ensure they allow for emerging trends, while still enabling year-on-year comparisons.
4 HM Government, , July 2019, Page 11
5 “, BBC News, 29 April 2019
6 Treasury Committee, Oral evidence: Independent Review of the Financial Ombudsman Service, HC1400, 22 January 2019,
7 UK Finance, , March 2019, p7
12 UK Finance, , 26 September 2019, p2
13 UK Finance, , March 2019, p7
14 UK Finance, , 26 September 2019, p5
15 UK Finance, , March 2019, p41
17 HM Government, , July 2019, Page 22, para 2.1
19 FCA, , November 2018
Published: 1 November 2019