Fraud and scam complaints reach an all-time high

Complaints about fraud and scams have reached their highest level in a three-month period, new data from the Financial Ombudsman Service shows.

Between April 1 and June 30 of this year, consumers filed 8,734 complaints for fraud and scams.

More than half of these cases involved online bank transfers approved by customers, also known as authorized push payment (APP) scams.

In comparison, during the same period in 2023/24 there were 6,094 reports of fraud and scam, representing a 43 per cent increase in cases.

The increase in cases is due to a higher number of multi-stage frauds, where customers file multiple claims due to the number of companies involved.

The rise in cases, as well as more online fraud cases filed by professional representatives, is also behind the fact that more and more people are inadvertently using their credit or debit cards to pay scammers.

Many banks have already signed up to the voluntary Contingent Refund Model (CRM) code, which provides additional protection to consumers and means they are reimbursed unless there are exceptional circumstances.

If a bank has not adhered to the CRM code, customers may be less likely to receive a refund if they have fallen victim to a scam and lost money.

Of the 4,752 PPP fraud cases received by the Ombudsman in the first three months of this financial year, 2,734 were not covered by the code, and 49 per cent of cases falling under the code were confirmed, compared with 36 per cent not falling under the code.

New fraud refund rules that will go into effect on October 7, 2024 should reduce the time it takes for scam victims to receive a refund.

Under new rules, introduced by the Payment Systems Regulator (PSR), firms will have to refund customers who fall victim to scams, unless the customer has been grossly negligent.

However, the new refund rules were set to cover APP scams of up to £415,000 with some exceptions, such as payment made abroad.

However, it is believed the payments regulator could water down this figure and cap it at £85,000.

Losses from PPP fraud amounted to £459.7m in 2023, UK Finance’s latest annual fraud report shows.

FOS data shows there has been a significant increase in complaints from people who found investment opportunities on social media and then unwittingly paid scammers using their debit or credit cards.

There were 1,500 complaints from people who used their cards to pay for investments that turned out to be scams, compared with around 1,100 complaints in the first three months of last year.

Card payments, unlike bank transfers, are not covered by the CRM code or the new PSR rules, so customers may have less protection if this happens.

Abby Thomas, chief executive and ombudsman at the Financial Ombudsman Service, said: “Being the victim of fraud and scam is a horrible experience, not just financially but emotionally too. So it’s disappointing to see complaint levels rising even further.”

‘Over the past few years, we have investigated thousands of cases and returned more than £150m to victims of these crimes.’

Pat Hurley, director of banking at the Ombudsman, said: “Fraudsters’ methods are constantly evolving and we continue to see this reflected in complaints coming into our service.

‘We currently receive and resolve around 500 reports of fraud and scams per week. In every case we receive, we look at the individual circumstances and investigate whether the company did everything it was supposed to do.

“When we accept complaints, we expect companies to learn from our findings and apply them to any future interactions with their customers.”