Fraud losses surge as scammers use AI to manipulate victims
Fraud losses from people being tricked into transferring money to scammers surged by nearly a fifth last year, as criminals turn to AI to manipulate victims.
More than half a billion was stolen in 2025 after artificial intelligence created a “lower barrier for entry” for criminals, according to UK Finance.
Criminals managed to trick victims as AI has made it easier for communications to appear more sophisticated, send messages at scale and mimic celebrities or people’s friends and family members to get them to hand over their cash.
Two-thirds of APP cases originated online, causing over 30 per cent of losses, reflecting scammers using AI to swindle victims.
APP fraud losses rise
In some cases, authorised push payments (APP) scam victims lost their money and were unable to get it back, with banks and providers only reimbursing 61 per cent of total victims, amounting to £354.3m.
The rise in APP fraud losses reported reflects the rapid scale and advancement of scams in which victims transfer money for goods or services that never materialise.
This caused APP losses to shoot up sharply to £576.4m, a 19 per cent annual increase, marking the highest total losses since 2021, when £583.2m was stolen.
Meanwhile, £500.8m in personal losses and £57.6m in business losses in APP scams were also recorded.
UK Finance also uncovered an uptick in cases being recorded, a seven per cent annual increase to 248,070.
Ruth Ray, managing director, economic crime at UK Finance: “We certainly are shocked, but we are not surprised.
“We are well aware that, particularly with the advent of AI, it lowers the barrier to entry for criminals to make their scams more sophisticated and make more of us vulnerable to and susceptible to clicking on links and content.
In October 2024, mandatory APP fraud reimbursement rules came into force.
The rules mean banks must reimburse APP fraud victims, unless the customer has been grossly negligent.
The protections apply when a transfer is made to and from a UK bank account and a reimbursement limit of £85,000 has been applied under the rules, although banks can choose to go further than this and repay higher amounts.
UK Finance pointed to figures from the Payment Systems Regulator (PSR), indicating that 88 per cent of “in scope” APP fraud was reimbursed to victims in the first year of their new rules being in operation.
Other losses
Elsewhere, investment fraud accounted for the highest proportion of losses, rising by 40 per cent to £221.5m.
Romance fraud also increased by 23 per cent to £39.2m, as scammers are able to manipulate victims “over months and even years”.
However impersonation fraud losses tumbled 12 per cent.
In total, criminals stole £1.2bn through payment fraud in 2025, with Ray arguing the high amount of losses emphasises that other players are “not tackling the underlying problem effectively enough”.
Ray said: “Fraud operates on an industrial scale, harming people, businesses and the UK economy, typically funding serious and organised crime in the UK and globally.
“The financial sector invests huge amounts in protecting customers, but we cannot be the only line of defence.
“Given most APP fraud still starts via online tech platforms or via telecoms, we urgently need stronger, enforceable responsibilities to be placed on these sectors.”