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INSIGHT-Welcome to Britain, the bank scam capital of the world

Thu, 14th Oct 2021 06:00

* Fraudsters steal $1 billion in just six months - industry

* Online scams aided by limited policing, fast payments –

* Law response 'completely out of step with threat' – crime

* Tech giants in focus as crooks take advantage of social

By Lawrence White and Iain Withers

LONDON, Oct 14 (Reuters) - It was an email offering a
discount on an electric toothbrush that began the sequence of
events that ruined Anna's life.

Within minutes of entering her card details, she got a call
from her bank telling her fraudulent transactions were being
made. The next day Robert Clayton from Britain's Financial
Conduct Authority called to say they were pursuing the criminals
responsible but that her savings were at risk.

There was no toothbrush, though. No fraud department, no
Robert Clayton. They were all part of a scam to gradually siphon
off Anna's life savings, and within a few weeks the plot had
succeeded, to the tune of about 200,000 pounds ($270,000).

"I am still in shock, the guilt and shame are impossible to
convey," said the 78-year-old widower from central England, who
did not want her full name to be used in this story.

She is one of thousands of people who have seen savings
swept away this year by an unprecedented wave of online bank
fraud hitting Britain, where you're more likely to be a victim
of online fraud than any other crime.

The country is the global epicentre for such attacks,
according to five of the biggest British banks and more than a
dozen security experts who said scammers were buying up batches
of consumers' personal details on the dark net to target the
record numbers shopping and banking online since the pandemic.

The country's super-fast payments infrastructure, relatively
light policing of fraud-related crime, plus its use of the
world's most widely used language English, also made it an ideal
global test bed for scams, the banks and specialists added.

A British record of 754 million pounds ($1 billion)was
stolen in the first six months of this year, up 30% from the
same period in 2020, according to data from banking industry
body UK Finance, and up more than 60% from 2017, when it began
compiling the figures.

That represents a per capita fraud rate roughly triple that
seen in the United States in 2020, according to a Reuters
calculation from UK Finance and the latest available Federal
Trade Commission data.

"The most sophisticated fraud tends to start in the UK, and
then move two years later to the U.S. and then around the
world," said Ayelet Biger-Levin, vice president of product
strategy at U.S.-based cybersecurity firm BioCatch, which
provides anti-fraud technology to banks.

"In the last 12 months we have seen more fraud attacks than
we had seen in any other year in history. Data breaches have
also accelerated, so there's a lot more personal information out
there that criminals can take advantage of."


Unlike simple email-based scams of the past purporting to be
from princes or oil barons seeking your help to shift their
millions, the modern bank scam can be sophisticated,
multi-phased and extremely convincing.

"We've seen some cases where the fraudster has been talking
to somebody for three or four years as someone else before they
actually scam them out of a large amount of money," said Brian
Dilley, group director for economic crime prevention at
Britain's biggest bank Lloyds.

Deena Karia, another scam victim, told Reuters how she lost
10,000 pounds in early February after buying a seemingly safe
bond purportedly issued by Credit Suisse and apparently listed
on price-comparison site MoneySuperMarket.

After filling out a form on the website and receiving a call
from a staff member there, she called them back on the number
listed on the website to check the phone number was legitimate,
made further checks about the bond and went on to invest.

Karia, from outer London, still does not know exactly how
her money was stolen, but believes the scammers may have created
a fake website mimicking MoneySuperMarket.

The genuine MoneySuperMarket warned on Feb. 15 of crooks
faking its website and impersonating its staff. A spokesperson
for the company said it is working to take down such fake
websites and phone numbers, working with the FCA to highlight
cloned websites and reporting issues to the police.

"I lost my Dad not long ago, I'm caring for my mother and
that money would have supported us for years," Karia said.

Barclays, her bank, has refunded only half the money, saying
she could have done more to protect herself.

"We have every sympathy with Miss Karia who was the victim
of an investment scam and as the case is currently being
investigated by the Financial Ombudsman Service, we await the
conclusion of their review," Barclays said.


The government's National Economic Crime Centre (NECC)
agrees with the banking sector's assessment that fraud
represents a threat to British security.

"It is growing from an already enormous scale," said Chris
Reed, fraud threat lead at NECC, which he said was meeting at
least every month with bank bosses, technology executives and
telecoms companies to assess and respond to threats.

Britain's Faster Payments' network, which allows transfers
between bank accounts to settle instantly rather than in hours
or days as in the United States and other developed banking
markets, means criminals can rapidly spirit away funds.

"The faster payment system has facilitated faster fraud,"
said Richard Emery, a fraud expert who is advising Anna and 63
other scam victims whose average loss is 102,000 pounds.

Pay.UK, which runs the network, said the system supported
the British economy, consumers and businesses. It added that
criminals were getting better at exploiting digitisation and
that it was working with the industry and regulator to fight

While security experts and senior bankers said many fraud
attacks could be traced overseas - including from India and West
Africa - Britain is also increasingly exporting attacks.

Crimes such as authorised push payments (APP) – where people
are tricked into authorising a payment by a criminal posing as
their bank or other trusted company – are proliferating globally
after having started off as a largely UK phenomenon.

The country ranks second in the world behind the United
States as a source of automated bot attacks, the fastest-growing
type of fraud attack in the world, according to data from
LexisNexis Risk Solutions, a financial crime analysis firm.

Bot attacks see criminals use a high volume of stolen
identity credentials to overrun a website, allowing them to set
up new accounts or access existing ones.

"It's popular to say the fraud threat is imported into the
UK, and I don't think that bears analysis," said NECC's Reed.
"There is a significant UK nexus to a lot of fraud, our
operational experience is showing that."


Britain's banks - which often pick up the compensation bill
when people are scammed - are trying to respond.

HSBC, which has operations in the Americas and Asia, has
hired more than 300 staff in a year to support its anti-fraud
operations in its home market and increased annual spending by
40% to deal with an "exponential" number of customers affected,
the bank told Reuters.

"The UK is the hotbed of activity for fraudsters. Currently
the UK accounts for about 80% of our global personal fraud
losses," it said.

Lloyds said it had invested 100 million pounds in its
defences over the past two years, while rival NatWest has 10% of
its workforce - amounting to 6,000 people - dedicated to
combating financial crime. TSB has hired 100 extra staff to
support fraud victims in the last year.

But lenders are also pressing the government to make social
media platforms, where they say some attacks originate, share
the burden. British lawmakers told bosses at Facebook, Google,
Amazon and eBay last month that they needed to do more combat

The NECC's Reed said another problem was that just 1% of
policing resources were dedicated to fighting fraud, despite it
making up over a third of all crime in England and Wales.

"I won't hide away from the fact that resourcing of the
response is completely out of step with the scale and
seriousness of the threat. We've got a mountain to climb."

This means that criminals are emboldened to target people
like Anna, who has little hope of recovering her savings.

The fraudsters had told her to shift her "at risk" cash to
an account on a cryptocurrency platform that they emptied -
while isolating her from family by stressing secrecy and
coaching her on how to respond to sceptical bank officials.

"They knew the name of my financial adviser, they were
utterly convincing as FCA staff," she said. "And they told me I
could not tell anyone about the investigation as it would damage
their efforts to catch the crooks."

($1 = 0.7327 pounds)

(Reporting By Lawrence White and Iain Withers; Editing by
Rachel Armstrong and Pravin Char)

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