Bank fraud rises with 'authorised' scam complaints spiking 30% in the UK

Bank scams
The increase in the number of people falling victim to scams reflects increased spending online and more fraudster activity during the pandemic. Photo: Getty

Complaints about “authorised” scams in the UK increased by 30% in the second quarter of this financial year, when compared to the same period in 2020/21, according to the Financial Ombudsman Service.

In a report published on Wednesday, the service said it received a total of 4,488 complaints about fraud and scams from July to September 2021 and upheld over 60% in the consumers’ favour. Of this figure, 2,243 complaints were about “authorised” scams compared to 1,725 in July - September 2020.

The increase in the number of people falling victim to scams reflects increased spending online and more fraudster activity during the pandemic. Overall, the Financial Ombudsman Service is continuing to uphold around three quarters of “authorised” scam complaints in the consumers’ favour.

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The vast majority of “authorised” scam complaints are authorised push payments (APP) where the victim is tricked into making bank transfers to an account posing as a legitimate payee. However, the Financial Ombudsman also sees disputes about whether or not the consumer authorised a payment or withdrawal with their bank card.

Almost three quarters of the “authorised” scam complaints that the Financial Ombudsman receives are about consumers not receiving the goods or services that they’ve ordered; where a scammer has tricked a consumer to move their money to a ‘safe account’ by telling them their bank account has been compromised; and investment scams.

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“It’s a real concern that we are continuing to see an increase in scam complaints, particularly when shopping online. With the festive period approaching, it’s vital that people are extra vigilant with their finances. If people feel they have not been treated fairly by their banks, we are here to help,” said Nausicaa Delfas, Financial Ombudsman Service interim chief executive and chief ombudsman.

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Gareth Shaw, Which? head of money, said: “A staggering amount of money has been lost to bank transfer scams during the pandemic, and it’s particularly concerning to still see so many cases where banks aren’t treating fraud victims fairly and handling the complaint as they should.

“While the Treasury’s commitment to make reimbursement mandatory was a big win for consumers, it’s vital for the government to legislate in a way that ensures victims get fair and consistent treatment. The regulator must also now ensure it is ready to introduce and enforce mandatory reimbursement rules the moment that legislation is passed."

Meanwhile, SEON, an AI based unified risk management platform, is predicting that this week’s Black Friday shopping bonanza is likely to generate a 150% increase in attempted loan fraud.

"It’s part of an alarming online fraud trend, which is being driven by cheap virtual phone numbers, custom domain names and email accounts. Fraudsters are utilising these services to set up fake online profiles that are then used to apply for real cash. This fraudulent process has never been easier, quicker or more affordable to pull off," the company said in a statement.

It is predicting that online lending sites will see a 300% surge in the use of suspicious emails ahead of Black Friday.