Number of complaints about fraud and scams reaches record high

New data from the Financial Ombudsman Service shows that complaints about fraud and scams have reached their highest level ever in three months.

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

More than half of the cases involved customer-approved online bank transfers, also known as APP (authorized push payment) fraud.

For comparison, in the same period in 2023/2024, there were 6,094 complaints of fraud and scams, representing an increase of 43 percent.

The increase in cases is due to a greater number of multi-stage fraud cases, where customers are making multiple claims due to the number of companies involved.

The fact that more and more people are unintentionally using their credit or debit cards to pay fraudsters is also the reason for the increase in cases. Also, more cases for online fraud are being filed by professional representatives.

Many banks have now signed up to the voluntary Contingent Reimbursement Model (CRM) code. This offers consumers additional protection and means that they are reimbursed, unless there are exceptional circumstances.

If a bank has not signed the CRM code, customers are less likely to get their money back if they fall victim to a scam and lose money.

Of the 4,752 APP fraud cases received by the Ombudsman in the first three months of this financial year, 2,734 did not fall under the Code. Of the cases that did fall under the Code, 49 percent were upheld, compared with 36 percent of the cases that did not fall under the Code.

New fraud compensation rules coming into effect on October 7, 2024, aim to reduce the time it takes for fraud victims to receive their compensation.

Under new rules, introduced by the Payment Systems Regulator (PSR), businesses must compensate customers who have been victims of fraud, unless the customer has been seriously negligent.

However, the new compensation rules aim to cover APP fraud up to £415,000, with some exceptions, such as payments made abroad.

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

UK Finance’s latest annual fraud report shows that APP fraud losses rose to £459.7m in 2023.

FOS data shows there has been a significant increase in complaints about people coming across investment opportunities on social media and then inadvertently paying fraudsters using their debit or credit card.

There were 1,500 complaints from people who used their card to pay for investments that later turned out to be fraud. In the first three months of the previous financial year, that was around 1,100.

Unlike bank transfers, card payments are not covered by the CRM code or the new PSR rules, so customers may be less protected if this happens.

Abby Thomas, CEO and Chief Ombudsman of the Financial Ombudsman Service, said: ‘Being a victim of fraud and scams is a horrible experience – not just financially, but emotionally too. That’s why it’s disappointing to see the number of complaints continue to rise.

‘Over the years we have investigated thousands of cases and paid back more than £150 million to the victims of these crimes.’

Pat Hurley, director of the Banking Ombudsman, said: ‘The methods used by fraudsters are constantly evolving and we see this reflected in the complaints we receive time and time again.

‘We currently receive – and resolve – around 500 complaints of fraud and scams per week. In all cases we receive, we look at the individual circumstances and investigate whether a company has done everything it should have done.

‘When we uphold a complaint, we expect companies to learn from our findings and apply them in future interactions with their customers.’