The 2021 European Fraud Map produced by global analytics firm FICO, with data from Euromonitor International and UK Finance, shows the United Kingdom and the Nordic region continue to lead Europe both in terms of digital transformation and fraud loss reduction. Denmark and Sweden achieved the highest percentage decreases in losses while the UK reduced card fraud losses by £49 million, the largest decline in the region. The UK data for the European Fraud Map came from UK Finance.
“The ‘return to normal’ from the pandemic in 2021 was uneven across the continent due to variances in vaccine rollout, resurgence of covid infections, and policies regarding retail, travel and tourism,” said Naomi Palmer, Senior Consultant, Fraud, Authentication & Financial Crime, FICO. “Only four countries of the 18 studied improved their card fraud performance in 2021. Reducing fraud in this turbulent climate was a great achievement.”
The downward trend in card fraud losses is mirrored by an upward trend in fraud P2P payments in the UK. In particular, there has been a sharp rise in Authorised Push Payment (APP) fraud. UK Finance’s latest fraud report shows a 39% year-on-year rise in APP losses. The report revealed £583.2m was stolen across 195,996 cases, underlining the significant threat to business and personal finances.
UK Posts the Region’s Best Overall Performance for Third Consecutive Year
The UK has achieved the largest net reduction of the 18 countries in this report for the third year running, further reducing overall losses by £49 million, a year-on-year decrease of 9 percent. This was done despite threat levels on cards, as measured by basis points, increasing by 32 percent in 2021.
Throughout 2021, Payment Service Providers (PSPs) and merchants in the UK have undertaken a collaborative effort to roll out and ramp up Strong Customer Authentication (SCA) controls on ecommerce transactions in advance of a 2022 implementation deadline. This extra layer of security is likely to have contributed to some of the reduction in UK CNP (card not present) fraud losses.
“The UK is an industry leader in both fraud management and customer enablement,” Palmer said. “Banks here have championed the adoption of omnichannel customer communication strategies in partnership with fraud detection as a means of enabling a frictionless and efficient customer experience, especially within the card fraud management arena. By empowering customers to self-resolve cases, resources can be dedicated to cases of the highest severity.”
The UK also has one of the highest attack rates in Europe, and tends to get new types of fraud before most countries in the region. As such, its challenges and successes can be instructive for card issuers in other countries. The majority of credit cards in the UK are protected by FICO® Falcon® Fraud Manager, which protects more than 2.6 billion payments cards worldwide.
“Whilst the UK does have the highest fraud losses in Europe, it has also done more than any other nation to reduce losses on cards.” Palmer said. “Additionally, the UK is a leader in terms of putting consumer care first, with the voluntary contingent reimbursement model being widely adopted across financial services.”
Fraud Levels Across Europe
The Netherlands saw the largest percentage increase in card fraud, rising 18 percent year-on-year and is unique because card not present or CNP fraud does not make up the majority of losses. Its primary loss driver was ‘Other’, which can mean account takeover or first-party fraud, for example. Scams are also prevalent – scammers have used various schemes to impersonate high-profile organizations such as the National Police or the Dutch Supreme Court in order to persuade victims to part with personal information and details such as their citizen service (BSN) numbers.
Despite the pandemic continuing to impact the tourism industry during 2021, Greece forecast promising economic recovery and robust growth for 2021 and 2022, thanks to surges in consumer spending and investment. Unfortunately, fraud losses seem to be following a similar trend, with overall losses increasing by nine percent from 2020 to 2021 and CNP fraud accounting for 91.5 percent of this value at €12.9M.