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Fraud and scam complaints hit highest ever level in UK

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Fraud and scam complaints hit highest ever level in UK

According to the Financial Ombudsman Service (FOS), incidents of digitally enabled financial fraud and scams in the UK have reached record levels, with consumers filing a total of 8,734 complaints in a three-month period. More than half of these complaints were related to customer-approved online bank transfers, also known as authorised push payment (APP) scams.

The data from FOS for the period from 1 April to 30 June showed a significant increase compared to the same timeframe last year, indicating a worrying trend. The actual numbers could be even higher due to underreporting, as many victims may feel embarrassed or afraid to report being scammed.

Several factors were attributed to the rise in fraud cases, including more elaborate fraud schemes involving multiple stages, an increase in the use of credit or debit cards to pay fraudsters, and a rise in online fraud cases reported by professional representatives.

Abby Thomas, chief executive and chief ombudsman of FOS, expressed concern over the escalating levels of fraud complaints. She emphasized that being a victim of fraud can have not only financial but also emotional repercussions, and encouraged victims to come forward without fear or shame.

Over the years, FOS has successfully returned over £150m to victims of fraud through its independent service. Thomas reassured victims that no matter how complex their case may be, they can rely on FOS to investigate their complaints.

The adoption of the Contingent Reimbursement Model (CRM) code by some banks was highlighted by FOS, noting that whether a bank has signed up to the code can impact the likelihood of victims getting their money back. Out of the APP scam cases reviewed, those covered by the code had a higher uphold rate compared to those that were not.

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Despite improvements in fraud detection by many banks, FOS reported a higher uphold rate for fraud and scam complaints compared to all product and complaint issues. The upcoming rules on reimbursement by the Payment Systems Regulator, which place the responsibility on banks to reimburse customers unless gross negligence is proven, are expected to expedite the resolution of fraud cases.

Current digital fraud trends

FOS data revealed a rise in complaints related to investment scams on social media platforms, where victims made payments using their cards. These scams, numbering 1,500 between April and June, offer less protection as card payments are not covered by the CRM code.

The agency also noted an increase in multi-stage frauds, particularly in cryptocurrency and ‘safe account’ scams, where funds pass through multiple banks before reaching the fraudster. These scams often involve social engineering tactics to deceive victims.

Mobile technology at the heart of the problem

With fraud increasingly involving digital elements, mobile banking and social media apps have become prime targets for scammers. Jacob Kerr, director of mobile software security specialist Appdome, emphasized the need for robust security measures in mobile apps to protect consumers from social engineering attacks.

Kerr stressed the importance of automated, real-time fraud protections in mobile apps to detect and prevent attacks effectively. He highlighted the growing demand from consumers for comprehensive security measures in mobile apps, urging organizations to prioritize mobile app security to ensure safer banking experiences and build customer loyalty.

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