14 February 2022
CEO, Digital Identity Net
Unlike last year, Valentine’s Day this year is likely to be one free from a lockdown.
People across the UK are set to spend big on their partners, pets, and themselves with gifts, dinner dates and trips away. This means a whopping £1.37 billion could be spent by the UK for Valentine’s Day in 2022.
But where there is money, there are fraudsters waiting to pounce.
The Effect of Romance Fraud
Romance scams, a type of Authorised Push Payment (APP) fraud, are becomingly increasingly commonplace with fraudsters targeting vulnerable people online, stealing hearts and emptying wallets.
At the heart of this type of fraud is people creating unverified, fake social media accounts or stealing real people’s identities before swindling money from unsuspecting victims.
Catfishing and romance fraud
Catfishing and romance fraud are rife, costing UK daters more than £15 million in the first half of last year.
A documentary on the topic, The Tinder Swindler, made it to number one on the Netflix charts this week.
The two hour intense special detailed how one man scammed tens of women into taking out millions in loans for him whilst he lived the high life using multiple fake identities.
This might sound like a fanciful tale, but sadly romance fraud is common, and victims are suffering the consequences all too often.
UK Finance recently published a report which found that romance scams specifically have risen in value by 62% since this time last year, costing UK victims more than £15 million.
While less common than other types of scams, they leave victims suffering with emotional trauma as well as financial. Not only do they have to deal with the loss of money, they also have to come to terms with the realisation that the relationship was a scam.
The government can't handle APP fraud alone
Romance fraud is just a small part of APP fraud which is when a customer is tricked into authorising a payment to an account controlled by a criminal.
Using tactics such as scam phone calls, text messages and emails, as well as fake websites and social media posts, criminals trick people into handing over personal details and passwords. This information is then used to target victims and convince them to authorise payments.
APP fraud is rampant. There was a 71% increase in APP fraud during the first half of 2021 and, for the first time, the amount of money stolen through APP fraud overtook card fraud losses.
It’s clear the UK government and law enforcement can’t tackle fraud through creating and enforcing legislation alone.
How open banking can tackle fraud
This type of transaction involves people sending money to criminals via their bank accounts. As a result, banks are increasingly footing the bill.
For example, TSB has refunded 97% of all bank fraud cases under its Fraud Refund Guarantee.
But what if there was a way we could verify people’s identity on both sides of a transaction, guaranteeing both parties are who they say they are before money is sent?
Using Open Banking to access the data held by the banks, which have verified the identity of 98% of the UK population, we can.
Such a system would enable people to prove they are who they say they are and verify the identity of the person on the other end of the transaction.
This type of system exists and has the power to dramatically reduce all types of fraud, protecting people from the financial and deep emotional pain caused by fraud.
We now just need banks and businesses to embrace it.
Want to know more? Take a look at OneID.