In the first quarter of this financial year (1 April – 30 June 2024), UK consumers lodged 8,734 complaints about fraud and scams, of which over half were in relation to customer approved online bank transfers, also known as authorised push payment (APP) scams. according to a report by the Financial Ombudsman Service.
In a statement on 4 September the watchdog said by comparison in the same period in 2023/24 there were 6,094 fraud and scam complaints, as reported last year.
The rise in cases was due to a number of factors including increasing numbers of multi-stage frauds which can see consumers put in multiple claims due to the number of firms involved, a growth in people inadvertently using their credit or debit cards to pay fraudsters, and more online fraud cases being brought by professional representatives.
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.”
Many financial providers have now signed up to the voluntary Contingent Reimbursement Model (CRM) code which provides additional protection for consumers, and means they are reimbursed unless there are exceptional circumstances. If a bank has not signed up, consumers can have less recourse for reimbursement.
Whether a bank has signed up to the CRM code or not can affect the outcome of a consumer’s case. Of the 4,752 APP scam cases received in the first three months of this financial year, 2,734 were not covered by the code. This is reflected in the uphold rate – with 49% of cases that fall under the code upheld, compared to 36% that do not.
Pat Hurley, Ombudsman director for Banking, said: “Fraudsters’ methods are always evolving, and we continue to see that reflected in the complaints brought to our service.
“We are currently receiving – and resolving – around 500 fraud and scam complaints a week. In all the cases we receive, we’ll look at the individual circumstances and investigate whether a business did everything it was required to do.
“When we do uphold complaints, we expect firms to learn from our findings and apply them to any future interactions with their customers.
“Our service is free, easy to use and impartial.”
The introduction of new upcoming rules should also 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 new reimbursement rules cover many APP scams up to £415,000 with some exceptions – such as the payment being made abroad.
Data also indicates that we have 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 CRM code or the new PSR rules.
There were 1,500 complaints from people who used their cards to pay for investments, which turned out to be scams, compared to around 1,100 complaints in the first three months of the last financial year.
We are also seeing more cases of multi-stage fraud where funds pass through several banks before reaching the fraudster.
This is particularly prevalent in cryptocurrency investment scams as well as ‘safe account’ scams – where people are cold called by fraudsters posing as a trusted entity, such as their bank, and persuaded to transfer money to another account.
Although banks have improved their fraud detection methods, the uphold rate continues to be higher than average, with us upholding 44% of fraud and scam complaints in the last quarter, compared to the average rate of 37% across all products and complaints issues.
There are ways in which people can avoid falling victim to a fraud the ombudsman said:
A bank or other official body, such as the police, will never call consumers and ask them to move their money to a ‘safe account’. Hang up the phone and contact your bank if this happens.
It’s rare that people will be asked to part with money as part of an employment opportunity. If people are asked to do this, it’s likely to be a scam.
Consumers should do their research if they plan on investing, particularly in investments found on social media. They should ensure that the provider is regulated by the Financial Conduct Authority and do their own due diligence. Otherwise they may lose all their money if it turns out to be a scam.
