Fraud and scam cases reported to the UK’s Financial Ombudsman Service hit a record high in the second quarter of the year, with authorized push payment (APP) fraud accounting for over half.
The service tries to resolve disputes between consumers and financial services companies – in this context, when a bank refuses to reimburse customers after they suffer fraud.
APP fraud is particularly contentious because the victim is tricked into sending money to the fraudster, who impersonates a legitimate entity. Many banks say that because the victim made a conscious decision to do so, they forfeit any potential reimbursement.
Between April and June 2024, consumers lodged 8734 complaints about fraud and scams – a 43% increase on the same time last year.
Read more on APP fraud: Banks Slammed for Low Fraud Reimbursement Rates
The ombudsman said the rise is due not only to more fraud, but several other factors including:
- More multi-stage fraud, where consumers file multiple claims due to the number of banks involved
- More people inadvertently paying fraudsters by credit or debit cards, which don’t offer the same consumer protections as bank transfers
- More online fraud cases being brought by professional representatives
Abby Thomas, CEO and chief ombudsman of the Financial Ombudsman Service, claimed her organization had returned over £150m to fraud victims over recent years.
“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,” she said.
“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.”
More Protection For Consumers
Many banks have signed up to the ombudsman’s voluntary Contingent Reimbursement Model (CRM), which provides consumers with additional protections in the event of fraud.
However, more than half of the 4752 APP scam cases received by the ombudsman over Q2 2024 were not covered by the code. Just 36% of these resulted in consumers getting their money back versus 49% of those covered by the CRM.
New rules set to be brought in by the Payment Systems Regulator (PSR) will pressure financial providers to reimburse customers who are victims of scams – including APP fraud up to £415,000 – unless the customer has been grossly negligent or the payment is made abroad.
“It’s worth remembering that a bank or an authority like HMRC or the police will never call and ask you to move your money to a ‘safe account,’” warned Liz Edwards, money expert at personal finance comparison site finder.com. “If you get a call like this, just hang up and contact your bank.”