Fraud hits RECORD high – just as compensation scheme scaled back

With the number of financial scam victims soaring, we reveal six ways you can stay ahead of the scammers.

Financial fraud is at an all-time high, according to data from the Financial Ombudsman, but whether victims will get their money back is another matter.  

In the first quarter of 2024 (1 April to 30 June 2024), the Financial Ombudsman Service received nearly 9,000 complaints (8,734) about fraudulent schemes – up 2,000 on the same period last year.

The Ombudsman says that on average it is receiving and investigating around 500 cases per week

During the period, more than half of these complaints were about authorised push payment (APP) scams, where scammers con people into sending money to what appears to be a legitimate bank account but is actually owned by fraudsters.

Customers are also being duped by so-called ‘romance scams’ where they are convinced over time by the fraudsters that they are in a relationship with them and then asked to send them money.

Rise in cryptocurrency scams

The Ombudsman says the reason for the increase is partly down to the complexity of so-called ‘multi-stage fraud’ cases, particularly in the case of cryptocurrency fraud, where scammers send the money to multiple accounts.

There has also been an increase in victims using credit and debit cards to pay cash into fake investment schemes.

Fraud cost UK victims £1.2 billion in 2023, with losses from APP scams worth £459.7 million, according to the banking body UK Finance.

Regulator reducing pay-outs to fraud victims

The bad news is that, at the same time, regulators are cutting back on the amount that banks will have to reimburse UK victims of fraud, following lobbying from the banking sector.

The Payment Systems Regulator is holding a consultation to slash the threshold from £415,000 to just £85,000 from 7 October, after previously saying that a maximum of £85,000 was too low.  

Consumer groups have reacted angrily, with Which? saying that victims of high-value frauds or those conned into transferring thousands of pounds for house deposits “stand to have their lives destroyed by this screeching U-turn”.

What’s more, not all UK banks are signed up to the reimbursement scheme, known as the Contingent Reimbursement Model, especially the smaller challenger banks.

However, the customers of these smaller banks can often prove to be a target for scammers.

In the first quarter, of the 4,752 APP fraud cases received by the Ombudsman, more than half (2,734) were not covered by the code.

How to beat the fraudsters

Many financial scams are complex and it’s easy for even the savviest people to be taken in by them, so don’t be embarrassed to admit to it and get help.

6 ways to keep safe from the scammers

Here are some steps you can take to ensure that you are protected:

• 1. Put the phone down immediately if you receive an unsolicited call about an investment, cryptocurrency, your broadband, mobile or another service.  

Remember that your bank, police officers or HMRC will never contact you by phone to ask you for your account details or to transfer money. If the call is unexpected, it’s most likely a scam.

If you think it might have genuinely been your bank or broker, find the correct phone number from your account details and call them directly to find out.

• 2. It’s extremely rare for anyone to have to pay money when applying for a job, so if you are asked for cash to do so, walk away.

If you are WhatsApped about a job by someone you do not know who claims to be from a recruitment firm, do not give them your personal details and report it.

• 3. If it sounds too good to be true, it usually is. And if you are being pressured to make a decision quickly it is most likely a scam.

Fraudsters play on your emotions to make you feel you might miss out if you don’t hand over your money immediately.

They may also sound knowledgeable about financial products, which may persuade you they are genuine.

• 4. Check that your bank is signed up to the compensation scheme known as the Contingent Reimbursement Model - as not all are. 

Keep a regular eye on your bank account for any suspicious transactions.

• 5. Financial scams grow in complexity and ingenuity all the time. 

Keep up to date on the latest fraudulent schemes through our website, your bank and the Financial Conduct Authority’s (FCA) website Protect yourself from scams | FCA.

• 6. If you think you’ve been contacted by financial scammers, report it to the FCA on 0800 111 6768 or via the online form Contact us | FCA.

If you’ve lost money to fraudsters, contact your bank immediately and Action Fraud on 0300 123 2040 or via their website Action Fraud.