3 November 2022

The cost of scamming crisis: how tech can lead the fightback against fraud

By Daniel Holden

Times are tough. The war in Ukraine, the collapse of the pound, supply chain disruptions, workforce shortages and the cost of living crisis have hit people’s wallets hard. These challenges have not just meant people have less money, but profoundly changed the way they think about their money too.

Fears of skyrocketing prices and squeezed finances between paychecks understandably make more people search out quick, cheap deals. Sadly, it also leaves them more susceptible to scams. The data is clear: over the last two years, the number of people falling victim to fraud in the UK rose by 25% and 73% of consumers have been targeted by scammers over the last three months alone.

Working in the financial services sector, I see every day how the techniques being deployed by scammers are increasingly sophisticated and tuned to exploit people’s needs. Phone calls are used in the winter because people are home more often and are more likely to pick up, car insurance scams target younger people and pensioners are being targeted as ‘money mules’ – a practice where people’s bank accounts are used to receive criminal cash.  Fake Ofgem texts, phone calls and emails requesting bank details for rebates have proliferated after the announcement of the Government’s energy subsidies, and fast loan scams have become so prevalent that Lloyds Bank were forced to issue a warning to customers to avoid sending money to ‘reserve’ short-term loans for cash-flow problems. 

If the cost of living crisis is the bait for victims, online services are the site of the crime. Its prevalence is so severe it is starting to impact the way consumers approach online banking and payments. A recent survey which my fintech payments business, Trust Payments, carried out found that 80% of Brits were concerned about fraud, 74% were worried about identity theft and 54% were afraid of bank impersonations.

We are using the latest AI to spot suspicious payments and 3D technology to authenticate payments. But as banks and payment services balance the growing, and at times conflicting, demands for security and convenience, an integrated strategy to tackle online fraud from industry and government is needed to prevent more financial crime. So what can be done about it?

The Government recently launched the new Public Sector Fraud Authority with £25m in funding, but this is a measly sum compared to the £1.3bn swindled by fraudsters in 2021 alone. Thankfully some serious thinking is being done in Parliament. A new Justice Select Committee report published this month highlights fruitful opportunities for reform. It shows how revamping the ‘unfit for purpose’ Action Fraud reporting service and shifting police resources to cyber fraud, consumers and businesses can provide some protection against the criminal underbelly profiteering from the cost of living crisis.

Sadly these changes will take time and in the difficult economic times ahead many will fall victim to fraudsters. For now, we all need to play our part in being vigilant and using the tools we already have available. Technology may be the tool of choice for many fraudsters but it can also be our defence. Just as businesses in the banking and payment sector are staying one step ahead of criminals by using the latest technology, each of us can use technology to warn our friends, family and colleagues of the latest scam.

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Daniel Holden is Group Chief Executive Officer at Trust Payments.