Fraudsters rake in £58m during COVID-19 by impersonating banks

Written by Alex Hamilton
16th September 2020

Impersonation scams in the UK increased by 84% in 2020 as fraudsters sought to exploit confusion around the COVID-19 pandemic.

UK Finance says criminals have changed tactics due to COVID-19

According to UK Finance, its members reported 15,000 cases between January and June 2020. Criminals raked in more than £58 million using the technique.

Impersonation scams occur when a victim pays a criminal claiming to be from a trusted organisation.

Of the 15,000 cases, more than 8,200 of them involved criminals posing as the police or as a victim’s bank. This represented a 94% rise year-on-year.

Another 6,730 cases involved fraudsters imitating other trusted organisations such as a utility company or government department.

£36.7 million was lost to bank and police impersonation scams and £21.2 million lost to scams impersonating trusted organisations.

UK Finance says the scam starts with a criminal telling a victim of a suspected fraud on a victim’s account.

Fraudsters convince the customer to protect themselves by transferring the money to a “safe” account belonging to the criminal.

Coronavirus tactics

The UK body says fraudsters are using the tactic more as confusion around the COVID-19 pandemic lingers.

Criminals have also posed as IT departments or software providers to trick those working from home to fix fake problems with their licences.

“Criminal gangs are ruthlessly exploiting this pandemic to commit fraud, so it’s vital we all work together to beat them,” says Katy Worobec, managing director of UK Finance.

“Fraudsters will spend hours researching their victims, but they only need you to let your guard down for a minute.

“We are urging the public to remain vigilant against these vile scams and remember that criminals are experts at impersonating people, organisations and the police.”

One measure in place to combat impersonation fraud includes the Banking Protocol, a scheme allowing bank branch staff to alert local police to scams.

Last week UK Finance reported that the Banking Protocol had stopped more than £19 million in fraud since January 2020.

No surprises

“It comes as no surprise that the uncertainty brought on by the pandemic would lead to a rise in financial crime,” Rachel Woolley, global director of financial crime at Fenergo, tells FinTech Futures.

“We’ve seen impersonation scams before, [and] the methods of laundering the proceeds through the financial system haven’t changed. Financial institutions have a responsibility to detect illicit activity and verify that the origins of cash deposits are not suspicious.

“With the appropriate systems and procedures in place, the industry as a whole will be much better equipped to tackle financial crime and protect consumers and businesses.”