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Since the pandemic, scams have increased dramatically, including a sharp increase in APP Fraud (authorised push payment fraud), in which victims are duped into sending money to accounts controlled by criminals. In the first half of 2021, APP fraud cost more than £355 million, a 71% increase over the corresponding period in 2020. In addition, the 58,000 cases recorded in the first half of 2019 nearly doubled over the last six months.
When you knowingly or unknowingly transfer money from your bank account to a scammer’s account, you are engaging in authorised push payment (APP) fraud or scam, also known as a bank transfer scam.
Authorised Push Payment (APP) fraud is the technical term for this type of scam. The perpetrator gains the victim’s trust by acting as someone they trust, like a lawyer or accountant, and then uses deception and manipulation to convince them to send large sums of money, frequently on an urgent and/or regular basis.
The money is frequently lost before any alarm bells ring because the fraud victim believes the transfer is legitimate, and the victim may be too ashamed to take action. It is frequently impossible to find or recover what has been lost because these payments are typically made abroad. Since the pandemic, bank transfer fraud has significantly increased because people spend more time online, costing millions in cybercrime losses.
Authorised Push Payment fraud, also known as APP fraud, is a type of fraud in which victims are persuaded to send instantaneous funds to con artists, sometimes using social engineering techniques involving impersonation.
These authorised frauds may also be related to investment fraud and romance fraud, in which the victim is tricked into sending money for investments that do not exist.
Scammers gain the victim’s trust by acting as someone they believe to be, such as a lawyer, accountant, friend, family member, romantic interest, or business partner. They then use deception and manipulation to get the victim to send money urgently or frequently from their bank account.
The money is frequently lost before any alarm bells ring, and the fraud victim may be too ashamed to take action because they believe the transfer to be genuine and legitimate. In addition, since these payments are frequently made overseas, they are often impossible to find or recover.
The increased use of real-time payment schemes has made it much simpler for cyber criminals to commit APP fraud because, once money has been transferred out of an account, there is no turning back once the victim realises they have been scammed.
The Netflix documentary “The Tinder Swindler” sheds light on romance scams, which frequently involve meeting through online dating apps and manipulating the victim to develop a romantic relationship and gain their trust. This progresses into demands for cash via check or bank transfer. Unfortunately, once the money has been transferred and the victim realises they have been defrauded, it is frequently too late to take action.
He initially contacted the female victims through the dating app Tinder, where he developed a rapport and eventually won their trust. When they were dating, he used cunning tactics to get them to regularly transfer urgently large sums of money, leaving them in debt.
The use of cryptocurrencies like Bitcoin and Ethereum in transactions is growing globally. Scammers then use promises of financial “quick wins” to entice potential investors to transfer funds to stock their cryptocurrency portfolios. Unfortunately, there is little chance of recovering the money from the con artists once the victim sends the money and realises they were duped.
Here, con artists send texts, WhatsApp messages, or emails to parents while posing as their kids to request emergency funds using justifications like having lost their phones or having an urgent rent payment due.
Fraudulent bank transfers and authorised push payments (APP) can affect individuals and businesses. Online fake invoices can be sent by con artists posing as suppliers or tradespeople. Once the payment has been made, it is frequently too late to request a refund.
Cybercriminals can use complex methods to trick their targets into believing they are trustworthy advisors, such as an accountant or lawyer, and then convince them to send money as a payment on account or as an invoice. Scammers can also pose as representatives of the police, local government, tax office, banks, or well-known companies like broadband or utility providers to trick victims into disclosing their private banking information and sending money.
It is crucial to inform your bank and the police immediately. Additionally, you can inform Action Fraud, the National Fraud and Cyber Crime Reporting Center, of any alleged scamming activity.
The police may launch a criminal investigation;
In addition to calling the police, you should take the following actions right away:
Your bank might halt the transaction, or your money might be recovered from the fraudster’s account.
However, time is of the essence in this situation, so it’s crucial to notify your bank immediately.
Additionally, you should contact the bank that sent the money and provide it with the account number because it might be able to stop the transfer and get the money back for you.
Using the sort code checker for the Faster Payment, you can determine which bank received it.
You can take your complaint to the Financial Ombudsman Service, who can look into it further if you’ve made an official complaint to this bank but don’t believe they responded quickly or appropriately enough.
If you’re feeling too ashamed, know that fraud cost the economy £1.2 billion in 2018, so you’re not alone.
Scams are more sophisticated and convincing than ever; regrettably, con artists can manipulate people of all ages and backgrounds.
If your bank has voluntarily signed up for the Authorised Push Payment Scam Code, which went into effect on May 28, 2019, it must take many actions to protect its customers and compensate those who weren’t at fault.
You can check the list on the Payment Service Regulator’s website or ask your bank directly.
The Code covers only transfers between UK accounts. Accounts held abroad are not protected.
Along with compensating victims of APP scams, banks that have signed up to the code have also agreed to take specific measures to safeguard customers, such as:
If a bank complies with the code, it is obligated to compensate APP scam victims even if they weren’t at fault—this is true even if the bank itself wasn’t at fault.
Even if a bank has followed all of the code’s requirements, it must still reimburse customers if they are vulnerable.
However, you will receive some but not all of your money back if the bank fails to provide the protections outlined in the code and you don’t do what was required of you.
And if you didn’t follow the code, but your bank did, you will unfortunately not get your money back, but your bank may provide you with some form of compensation.
The Court may grant compensation if criminal proceedings are pursued, and there is a successful conviction. However, it may not always be easy to find the fraudster, especially if they are abroad or don’t have any assets left to use as payment for any damages.
Many victims are unaware that the banks from which the scammer’s payments are made have a responsibility to exercise due diligence when managing their clients’ accounts. The banks should have procedures to identify and respond to any “red flags,” such as vulnerable customers, frequent, high-value payment transfers, or other unusual or out-of-character transaction activity, in addition to having vigorous security checks and data protection measures.
The Financial Ombudsman Service can be contacted in cases where a bank and a customer who was the victim of a scam are at odds (FOS). FOS will examine the scam’s circumstances and the bank’s response. FOS will consider that banks will be more knowledgeable about the types of fraud than the customer, so they should take all reasonable precautions to protect them, such as halting erroneous transfers, freezing accounts, or coordinating with other banks.
Numerous recent FOS decisions have sided with customers who have fallen prey to these scams, with some awarding significant compensation.
The Financial Ombudsman Service (FOS) upheld a complaint against HSBC Bank Plc. in late December 2021. (HSBC).
Miss M, a client of the bank, lost £7,303 in a “romance scam.” She believed she had begun a romantic relationship through an online dating site but had been tricked. The con artist demanded that Miss M transfer money from her bank to an international account. Miss M made two payments, and it wasn’t until the con artist demanded a third payment that Miss M began to get worried and contacted HSBC. However, despite contacting the receiving bank, HSBC could not locate the payment.
Miss M complained to HSBC, but they declined to take action.
The FOS was notified and asked to investigate the complaint. Despite Miss M having authorised the payment, FOS believed that HSBC could have done more to stop the scam. FOS upheld the complaint, and HSBC was ordered to compensate Miss M for the trouble and upheaval by paying her compensation of £7,303, plus interest and £200.
According to another FOS decision, a bank transfer scam cost Mr R £323,600 from his Lloyds Bank Plc (Lloyds) account. At a time when he was vulnerable and lonely, Mr R. had made an online friend. After the con artist gained his confidence, Mr R transferred £323,600 over two months to the con artist’s bank account, which is also with Lloyds.
When Mr R. met with this financial advisor two months after he began paying the fraudster, he was informed that he might have been the victim of a scam. After contacting Lloyds, Mr R was able to get back £180,697 of the total he had transferred. However, Mr R referred the situation to FOS because he still owed £142,902, and Lloyds was unwilling to pay the total amount.
Although Lloyds had stepped in, FOS found they had not done so quickly enough. Since Mr R’s account had an unusual spending pattern, according to FOS, Lloyds ought to have gotten in touch with him.
While FOS acknowledged the difficulties associated with transaction monitoring, there is an exception for banks to keep an eye on accounts for suspicious transactions and get in touch with clients who may be targets of fraud.
Even though Mr R had personally approved every payment to the fraudster, FOS determined that Lloyds had not taken sufficient precautions to protect Mr R. As a result, Mr R was given £133,400 in addition to interest and £1,000 for his suffering.
Due to the bank’s mistakes, FOS frequently rules in favour of victims of fraud, which is excellent news for consumers. However, it is worrying that some fraud victims are not coming forward.
Because victims might feel too embarrassed to contact the police or take any action against their bank, possibly because they believe it is their fault and there is nothing they can do, this type of scam may go largely unreported. However, it is imperative that you DO report any fraudulent activity to both your bank and the police or these scammers and fraudsters will keep trying to con people out of their life savings.
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Peter is a solicitor who has worked as a professional litigator for 3 years. More recently Peter has specialised in data breach compensation claims and over the last 2.5 years has gained a wealth of knowledge in this sector. Peter now works with us to share his knowledge and inform the general public.
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