The Financial Ombudsman Service (FOS) has reported a significant surge in fraud and scam complaints, reaching levels not seen in the past six years. Between April 1 and June 30, consumers lodged 8,734 cases, marking an astonishing 43% increase compared to the same period in 2023. This surge is the highest since the FOS started tracking such data in 2018, indicating a troubling trend. Several factors contribute to this increase, including the proliferation of investment scams on social media, the complexity of cases where consumers make multiple claims as funds pass through different banks, and a rise in online fraud incidents handled by third-party companies.
Authorized Push Payment Scams
A significant portion of these complaints, more than half, pertain to authorized push payment (APP) scams, which manipulate customers into approving online bank transfers to fraudsters. Out of the 4,752 APP scams reported during this period, 2,734 cases were not covered by the voluntary code that reimburses consumers unless there are exceptional circumstances. Despite many banks’ participation in this voluntary code, some institutions, such as TSB, choose to operate their own fraud refund guarantees. Pat Hurley, the ombudsman director for banking, has pointed out that the evolving strategies of fraudsters are clearly mirrored in the rising number of complaints.
New regulations introduced by the Payment Systems Regulator (PSR) aim to accelerate refunds for fraud and scam victims, mandating that financial companies reimburse customers unless gross negligence by the customer can be proven. The FOS is optimistic that these changes will mitigate the impact of fraud. However, the most recent findings indicate that only 49% of cases under the current voluntary code were upheld by the FOS, revealing gaps in the system that need addressing.
The Evolving Threat of Fraud
The recent surge in fraud complaints underscores the persistent and growing threat posed by increasingly sophisticated fraudsters. Abby Thomas, the chief executive and chief ombudsman of the FOS, expressed disappointment over the rising levels of complaints and encouraged victims to come forward without any hesitation or fear. Over the past few years, the FOS has successfully returned over £150 million to fraud victims, showcasing its active role in combatting this issue and providing restitution to those affected.
Additionally, the PSR’s decision to lower the maximum reimbursement amount from £415,000 to £85,000 reflects the outcome of intense lobbying from lenders. This adjustment aims to strike a balance between the protection of consumers and the responsibilities placed on financial institutions. While this reduction might cause concerns among consumers, it is designed to ensure that banks remain accountable while managing their exposure to significant financial risks posed by large-scale scams.
Practical Tips and Future Measures
The Financial Ombudsman Service (FOS) has witnessed a dramatic increase in fraud and scam complaints, reaching the highest levels in the past six years. From April 1 to June 30, consumers filed 8,734 cases, an extraordinary 43% rise from the same period in 2023. This surge marks the most significant uptick since the FOS began reporting this data in 2018, highlighting a concerning trend. Several elements contribute to this alarming increase. The spread of investment scams on social media is one major factor. Another is the complexity of cases where consumers lodge multiple claims as their money moves through different banks. Additionally, there’s been a notable rise in online fraud incidents managed by third-party companies. The combination of social media scams, intricate banking cases, and third-party handled online fraud has led to this unprecedented rise in complaints. As the digital landscape evolves, consumers need to stay vigilant, and regulatory bodies must adapt swiftly to protect against these evolving threats.
