Online Payment Fraud

Our Consumer Omnibus surveyed 2,100+ UK consumers to explore who is most concerned about online payment security, who has been affected by fraud, and the implications on their online payment habits.

Last year alone, cyber-fraud caused Brits to lose an astonishing £4 billion. Online shopping accounted for the majority of fraudulent activity, with 67,300 cases reported in 2022, resulting in a total loss of £103 million. Notably, 1 in 5 consumers surveyed had fallen victim to fraud in the previous 12 months, with nearly 3 in 5 (58%) losing under £500.

Older generations are more concerned about online payment security

The majority (61%) of UK consumers have some concern over their data security when making online payments. But perhaps unsurprisingly Baby Boomers are the most concerned, with 24% expressing ‘extreme concern’ in comparison to only 12% of Gen Z.

However, whilst being the least concerned over online payment security, Gen Z and Millennials are the groups who have often fallen victim to fraud (possibly resultant of their increased digital exposure); 32% and 28% respectively cite experiencing fraud in the past 12 months in comparison to just 18% and 8% of Gen X and Baby Boomers.

Current measures are no longer enough to safeguard consumers’ details

9 in 10 consumers take measures to protect their data, although 9% do not take any preventative action.

On average, consumers use at least four different methods, such as strong password protection (55%) and multi-factor authentication (35%). Additionally, one-third of respondents use secure networks, change their passwords regularly, and install software and virus protection.

So why, when following the advice provided to them, are so many consumers still having issues with fraud?

Consumers are increasingly being caught out by more agile forms of fraud 

Advanced payment fraud (authorised fraud) is the most frequently mentioned fraud experienced by those we surveyed, affecting 1 in 3. UK Finance describes losses from authorised fraud as being ‘driven by the abuse of online platforms by criminals’.

Gen Z consumers are more frequently falling victim to this variant of fraud, but often due to less security-related causes such as text scams (13%), mobile device theft (18%) and fraudulent charities (25%). While Baby Boomers are more often affected by credit card fraud (35%) and phishing scams (24%).

Banks and payment providers can do more to protect their customers

As for implications, 60% of fraud victims are making fewer online/digital payments, and 1 in 10 have stopped making online payments entirely. However, as digitalisation becomes more prevalent, it’s increasingly difficult for consumers to avoid online transactions.

The older generation is more concerned about the security of their online payments, yet they’re at a higher risk because they prefer manual methods over storing their information securely. Over 3 in 5 (64%) Baby Boomers make online transactions by manually entering their card details, while Gen Z and Millennials store “some” or “all” of their data online, with 70% and 65%, respectively.

Even though the manual input of card details poses a greater security risk, older generations may not be ready to change their habits and move to digital. As a result, they require more support and guidance from their payment providers to use advanced digital payment techniques to mitigate risk.

Younger customers, despite being adept at using advanced technology, are more frequently exposed and unsuspecting of fraud. They require more preventative measures from payment providers.

In an era of digitalisation is it becoming increasingly difficult for consumers to avoid making online transactions – and why should they?