Financial Ombudsman reveals that fraud and scam complaints have hit highest ever level

The Financial Ombudsman Service (FOS) data released by them on the 4^th September 2024 shows that fraud and scam complaints are at their highest ever quarterly level.

The FOS data reveals that:

• More than 8,700 fraud and scam cases were submitted in just a three month period
• Over half of these cases were in relation to online bank transfers
• Financial crime such as this is becoming more complex and convincing – with some frauds involving multiple banks

Between 1^st April – 30^th June 2024 consumers lodged 8,734 complaints in relation to fraud and/or scams. Over half of these complaints were regarding customer approved online bank transfers, also known as authorised push payment (APP) scams.

To compare this to the same period in 2023-2024 there were 6,094 fraud and scam complaints reported. This means that one year on, the FOS are seeing an increase of 2,640 complaints.

Why are the FOS seeing a rise in a number of complaints for fraud and scams?

The main factors contributing to this include:

• Increasing numbers of multi-stage frauds which can see consumers put in multiple claims due to the number of firms involved
• A growth in people inadvertently using their credit or debit card to make payments to fraudsters or scams
• More online fraud cases being brought by professional representatives

Will the number of complaints the FOS receive continue to increase? 

Many financial providers have now signed up to the voluntary Contingent Reimbursement Model (CRM) code which provides additional protection for consumers, and means they are reimbursed unless there are exceptional circumstances. If a bank has not signed up, consumers can have less recourse for reimbursement.

Whether a bank has signed up to the CRM code or not can affect the outcome of a consumer’s case. Of the 4,752 APP scam cases the FOS received in the first three months of this financial year, 2,734 were not covered by the code.

This is reflected in their overall uphold rate – with 49% of cases that fall under the code upheld, compared to 36% that do not.

The introduction of new rules introduced on the 7^th October 2024 should also speed up the time it takes for complainants to be reimbursed. These reimbursement rules, which will apply to all firms, have been brought in by the Payment Systems Regulator (PSR) and put the onus on financial providers to reimburse customers who are victims of scams unless the customer has been grossly negligent.

How can I avoid becoming a victim of a fraudster or a scam?

• Do your research – if you are contacted by someone you do not know offering you anything or requesting suspicious activity from you, you should ensure that you are 100% sure of who you are speaking to and the provider is regulated by the correct authorisation body.
• If you are unexpectedly contacted by an organisation or company – be wary of unexpected contact
• If someone is asking you for personal information such as your details, PIN number or money – do not engage! Do not unnecessarily share personal information that may assist the scammer

Further reading

Bank fraud and scam claims – Oakwood Solicitors

New Payment Systems Regulators rules for APP scams – Oakwood Solicitors

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