Fraud and scam complaints hit six-year high

Complaints about fraud and scams have reached a six-year high, with half about bank transfers, according to the Financial Ombudsman Service (FOS).

Consumers lodged 8,734 cases between 1 April and 30 June, said the service – which resolves disputes between consumers and financial firms.

This represents a 43% increase on the same period in 2023. The quarterly figures are also the highest since the FOS started tracking data in 2018.

The FOS blamed several factors for the rise including:

• Growth in investment scams on social media where fraudsters demand payment by credit or debit card
• Consumers making multiple claims as funds pass through several banks before reaching the fraudster
• More online fraud cases being handled by companies who manage claims for consumers

Pat Hurley, ombudsman director for banking, said: “Fraudsters’ methods are always evolving, and we continue to see that reflected in the complaints brought to our service.”

More than half of the complaints (4,752) were linked to authorised push payment (APP) scams, when customers are tricked into approving an online bank transfer to a fraudster.

But 2,734 of those cases were not covered by a voluntary code, which provides additional protection for consumers and means they are reimbursed unless there are exceptional circumstances.

Many banks have signed up to the voluntary code. Some banks operate their own fraud refund guarantees, such as TSB.

The data was released amid reports that the Payment Systems Regulator was set to reduce, to £85,000 from £415,000, the maximum amount that banks would have to reimburse fraud victims under new measures due to come into force within weeks.

The Financial Times said the climbdown followed intense lobbying from lenders.

‘No one should be afraid to come forward’

Around 49% of cases which fall under the current voluntary code were upheld by the FOS.

Abby Thomas, chief executive and chief ombudsman of the FOS, said “it’s disappointing to see complaint levels rising to even higher levels”, adding “nobody should be afraid to come forward”.

“In recent years, we have investigated thousands of cases, returning more than £150m to those who have fallen victim to these crimes,” she said.

New rules will speed up refunds

The FOS said new rules are being introduced which should speed up the time it takes for victims of fraud and scams to be reimbursed.

The scheme, which will apply to all firms, is being introduced by the Payment Systems Regulator (PSR) and requires financial companies to reimburse customers who are victims of scams unless the customer has been grossly negligent.

The rules will cover many APP scams of up to £415,000 with some exceptions – such as the payment being made abroad.

Tips to avoid scams

The FOS has offered some tips to avoid falling victim to fraud:

• A bank or the police will never call to ask you to move your money to a “safe account”. Hang up the phone and contact your bank.
• Be wary of paying money as part of an employment opportunity. It is likely to be a scam.
• Investments advertised on social media could be dodgy. Ensure the company is regulated by the Financial Conduct Authority.