UK consumers lodged a record 8,734 complaints about fraud and scams, in the quarter April to June, according to the Financial Ombudsman Service. More than half of those were in relation to customer approved online bank transfers, also known as authorised push payment (APP) scams. By comparison the same first quarter in 2023-24 saw 6,094 fraud and scam complaints.
According to the ombudsman, the rise in cases is due to a number of factors including more multi-stage frauds which can see consumers put in multiple claims due to the number of firms involved; more people inadvertently using their credit or debit cards to pay fraudsters; and more online fraud cases being brought by professional representatives.
New upcoming rules should speed up the time it takes to be reimbursed. These reimbursement rules, which will apply to all firms, are being brought in by the Payment Systems Regulator (PSR) and put the onus on financial providers to reimburse customers who are victims of scams unless the customer has been grossly negligent, the ombudsman adds.
It’s seen a significant rise in complaints where people spot investment opportunities on social media and then inadvertently pay fraudsters using their debit or credit cards. Where this happens, the consumer can have less protection because card payments, unlike bank transfers, are not covered by the (voluntary) CRM (Contingent Reimbursement Model) code or the new PSR rules.
As for multi-stage frauds where funds pass through several banks before reaching the fraudster, for example in cryptocurrency investment scams or ‘safe account’ scams, people are cold-called by fraudsters posing as a trusted entity, such as their bank, and persuaded to transfer money to another account.
You can report fraud or cybercrime to the police reporting line Action Fraud, using an online reporting tool. Visit https://www.actionfraud.police.uk/.
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Abby Thomas, Chief Executive and Chief Ombudsman of the Financial Ombudsman Service, said: “Being a victim of a fraud and scam is a horrendous experience – not just financially, but emotionally too. That’s why it’s disappointing to see complaint levels rising to even higher levels.
“We often hear from people embarrassed to have fallen victim to a fraud, but these crimes can be complex and incredibly convincing, and nobody should be afraid to come forward. In recent years, we have investigated thousands of cases, returning more than £150m to those who have fallen victim to these crimes. No matter how complex a case is, people can come with confidence to our free, independent service and we’ll investigate their complaint.”
Jack Kerr, Director of Appdome, says: “The rise in mobile fraud is powered by the ever-growing sophistication of tools cybercriminals have at their disposal. The almost universal use of mobile banking and social media means that these and other mobile apps have become prime targets for scammers, where social engineering attacks, like vishing (voice phishing), are regularly being used to exploit and target unsuspecting users.
“While the Authorised Push Payment (APP) offers some protection against APP scams, more action is needed to combat these growing threats. Mobile brands must ensure they have robust security and anti-fraud measures built into their mobile apps to look after their consumers. For these to truly work, protections must be automated and operate in real-time rather than applying a band-aid approach. This way, brands can continuously detect, block, and intervene when social engineering attacks attempt to exploit user trust.
“Mobile brands need to respond to pressures from consumers, who are growing increasingly security-conscious; nearly all of 25,000 mobile consumers recently surveyed (99.5pc) by Appdome demand comprehensive protection in their mobile apps and are holding mobile app developers responsible for taking care of them. By prioritising mobile app security and fraud protections – organisations can not only meet regulatory standards but also ensure safer banking experiences and foster greater loyalty with their customers.”
