Criminals have been finding ways to separate you from your money since money was invented.
In the modern world, fraud is fast becoming the way they prefer to do it. Fake phone calls, emails and websites mean much lower risks for them, and potentially much higher rewards.
It’s big business. £450.7m was still lost to fraudsters last year.
Being a victim of fraud can be a nightmare, but at least you can count on your bank being sympathetic, and refunding the money taken by the scammers.
Or can you?
Cutting your safety net
Banks are lobbying for new fraud reimbursement rules to be watered down and are already succeeding.
One of the biggest scams is APP – “Authorised Push Payment”. This is where victims are convinced to move their money into a “safe” account controlled by the fraudsters, at which point it is lost. Ticket sale scams, such as those aimed at Oasis and Taylor Swift fans, are also considered APP frauds.
Since last October, companies which handle payments have been required to give victims of “Authorised Push Payment” (APP) fraud their money back, up to a limit of £85,000. The scheme seemed to be working. The amount lost to APP frauds dropped by 2% between 2023 and 2024, according to UK Finance, and the number of cases fell by a fifth.
The industry warned of the potential problems of moral hazard – which is when consumers are incentivised to lie – and that fraudsters would pose as victims. Smaller payment companies had said that one large claim could wipe them out
Originally, the reimbursement limit was set to £415,000, but the banks negotiated to cut it to £85,000, the same as the Financial Services Compensation Scheme.
Making it harder to claim
The current rules mean that the only reasons that customers can be denied a payout are if they’ve ignored warnings, failed to quickly notify their bank of the fraud, refused to share information about the scam or do not consent to a police report being made.
In meetings held in May, banks called for stricter rules around victim behaviour, arguing that the current standards are too lenient. They claim that even when customers are reckless, ignore warnings, lie to their bank, or are potentially complicit in the scam, they are still entitled to reimbursement under the existing framework. Banks believe this undermines fraud prevention efforts and creates a moral hazard, where some customers may feel incentivised to act irresponsibly without consequence.
The Payment Systems Regulator (PSR) will hold an independent review of the mandatory scheme in October and will then recommend changes. This could mean that customers could be denied refunds in more cases.
You may need to protect yourself
There is little evidence that fraudulent reimbursement claims are on the up, but the signs are that it will be harder to prove you are a victim, and that more people will lose money as a result.
The need to protect yourself from fraud is greater than ever. Most APP fraud starts online or over the phone, through social media, fake messages and calls. When you are contacted by someone over any of these channels, you need to be wary.
- You need to know that they are who they say they are. Fraudsters may claim to be from your bank; from a financial supplier you may or may not do business with or even the police. Your first thought should be that they are not. Check by calling back, on a number you know, not one that they provide.
- You need to take your time. Don’t be rushed into taking any action and certainly never authorising a payment. Stop, think and check with a number you can trust.
- You need to be suspicious. Don’t believe what people who have contacted you say, and don’t reveal anything. That includes your account details, your date of birth and even your name. Most people don’t like to sound rude and may answer questions from someone who sounds reasonable. Fraudsters count on this to manipulate you.
Keeping safe
If you can show that you have been a victim of fraud, the banks and other legitimate financial suppliers may be prepared to refund your losses – although they may deduct £100 for their trouble.
To help keep safe only do business with financial providers you can trust.
At Continuum we work to get to know you and provide a personal service. At Continuum, we are committed to understanding your individual needs and delivering tailored, personal service. We are fully accredited and regulated, and the advice we provide gives you the right to refer any concerns to the Financial Ombudsman Service (FOS).
As part of our commitment to delivering consistently good outcomes for our clients, we fully embrace the FCA’s Consumer Duty. This means acting in your best interests at all times, providing clear and transparent information, and ensuring our services meet your needs and expectations.
Your financial wellbeing is our priority. Stay safe — contact us today
https://www.telegraph.co.uk/money/banking/fraud-payouts-capped-85k-backlash-banks
https://www.telegraph.co.uk/money/banking/banks-get-powers-to-charge-fraud-victims-100
Fraud losses hit £1.17bn for second year running – Which?
UK Finance: Fraud Losses Flat at £1.17bn as Criminals Shift | FinTech Magazine
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation you should seek independent financial advice before embarking on any course of action.
