UK online sectors saw dramatic rise in fraud in 2015

Figures from Financial Fraud Action UK have revealed a sharp rise in online banking fraud in 2015; losses increased by 64% and the volume of cases rose by 23%, supporting the belief that high-net-worth and business customers were the most targeted. More positively, 40% of losses were recovered. The value of e-commerce fraud rose 19% to £261.5m, compared with face-to-face transactions, such as contactless cards and mobile devices like Apple Pay, where losses amounted to £2.8m across spending of £7.75bn. The group suggested that cyber criminals continue to exploit online channels where they have a higher chance of success.

Online banking and e-commerce fraud both saw major spikes over the past year, growing faster than total payment card fraud, according to the latest industry figures.

The Year-End 2015 Fraud Update from Financial Fraud Action UK revealed that the value of e-commerce fraud jumped 19% from 2014 to 2015 to reach £261.5 million.

When including mail order and telephone fraud – which spiked 22% – the figure for total card not present (CNP) losses amounts to an even higher £398.2m.

Financial Fraud Action UK tried to soften the blow by suggesting the jump in fraud could be explained by an increase in online card spending over the period by 21% to £211 billion.

It’s clear that fraudsters are continuing to exploit the online channel as they have a higher chance of success than with face-to-face transactions.

Bearing this out, fraud on contactless cards and mobile devices – for example those using Apple Pay – amounted to losses of just £2.8 million during 2015, compared to spending of £7.75 billion over the same period.

However, it was online banking that saw the biggest spike in fraud last year. Losses jumped a massive 64% to reach £133.5m in 2015, while the volume of cases reported increased 23%. This proves criminals are increasingly targeting “high-net-worth and business customers,” the report claimed.

In some good news, however, 40% of losses were recovered after the incident.

Financial Fraud Action UK blamed an increase in phishing, corporate data breaches an “impersonation and deception scams” as the main drivers in the uptick in online fraud.

John Lord, managing director of identity data intelligence firm GBG, argued that a single fraud incident can often have a far reaching impact for the victim as many experience additional problems because a key account gets blocked.

“If someone who recently experienced a card fraud is attempting to make payments to an online retailer, for instance, the organization should be able to request additional, uncompromised personal information in order to authenticate the customer, rather than simply stop the transaction entirely,” he added.

“In the battle against fraud, we actually need access to more personal data – not less. Otherwise how can you validate that what you have been told by the customer is authentic?”