The number of fraud and scam complaints to the Ombudsman hit a record high in just a three-month period, but it’s hit and miss whether you’ll get your money back.
In the first quarter of the financial year (1 April – 30 June 2024), 8,734 fraud and scam complaints were brought to the free Financial Ombudsman Service.
This represents an increase of more than 2,000 complaints compared to this time last year when the Ombudsman received 6,094 fraud and scam complaints.
As such, complaints about fraud and scam have reached their highest ever level, with the Ombudsman revealing it is receiving and resolving around 500 cases per week.
In Q1 2024, over half related to authorised push payment (APP) scams, where a victim is conned into transferring money to a seemingly legitimate contact’s bank account, but it is actually sent to a scammer.
APP scams remain the biggest threat to customers and businesses, a survey of banking providers and tech companies surveyed by The Payments Association found.
The reason for increases in fraud cases – which cost victims in the UK a total of £1.2bn in 2023 – are mainly due to three factors, according to the Ombudsman.
One is the increasing numbers of ‘multi-stage frauds’, where complainants need to make several claims to cover the number of firms involved.
This issue is prevalent with cryptocurrency investment scams, which involves money transferred to multiple accounts after victims are cold-called by fraudsters who convince them to invest in a ‘win-win’ cryptocurrency stock.
Another reason for the upsurge is that more people are also using their credit or debit cards to pay fraudsters through other fake investment ‘opportunities’. This accounted for 1,500 complaints in the first quarter of 2024/25, which is around 400 more than in the same period the year before.
Also, the involvement of professional representatives has increased the number of complaints received.
Fraud victims: Will you receive your money back?
The Ombudsman said that in recent years, it has investigated thousands of cases, returning more than £150m to fraud victims.
However, whether you’ll get your money back largely depends on who you bank with.
Many financial providers are signed up to the voluntary Contingent Reimbursement Model (CRM) which means victims get their money back unless there are exceptional circumstances. However, if a bank hasn’t signed up, there’s less chance for reimbursement for that individual victim.
The Ombudsman revealed that of the 4,752 APP scam cases received in Q1, 2,734 were not covered by the code. As such, this is reflected in the uphold rate with 49% of cases that fall under the code upheld, compared to 36% that do not.
Next month, new rules will be introduced by the Payment Systems Regulator to improve the process of paying APP scam victims who used Faster Payments (transfers either using their banking app, online account or even in branch).
The updated legislation to be introduced on 7 October means both the sending and receiving payment service provider need to split the refund between firms evenly.
The maximum reimbursement you can claim will be £415,000, but reports suggest that figure could be reduced to £85,000.
Rocio Concha, Which? director of policy and advocacy said: “Fraud victims are being badly let down by the current system of reimbursement, with wildly differing outcomes depending on who the victim banks with. These figures serve as a reminder that a new mandatory system of reimbursement which will ensure the vast majority of victims get their money back cannot come soon enough.”
Concha added: “The regulator should ensure the new scheme is up and running on 7 October. The Government should support the regulator in delivering this as the first step towards showing the Government will treat fraud as a national priority, with a joined-up approach that brings together different sectors to tackle this terrible crime.”
‘Nobody should be afraid to come forward’
Abby Thomas, chief executive and chief ombudsman of the Financial Ombudsman Service said it’s “disappointing to see complaints rising to even higher levels”.
Thomas said: “We often hear from people embarrassed to have fallen victim to a fraud, but these crimes can be complex and incredibly convincing, and nobody should be afraid to come forward.
“No matter how complex a case is, people can come with confidence to our free, independent service and we’ll investigate their complaint.”
Tips to avoid scams
The Ombudsman, which resolves financial disputes for free, has shared three tips to help prevent you being a victim of fraud:
Hang up – A bank or other official body, such as the police, will never call and ask you to move your money to a ‘safe account’. Hang up the phone and contact your bank if this happens.
Suspect job opportunities – It’s rare that people will be asked to part with money as part of an employment opportunity. If you’re asked to do this, it’s likely to be a scam.
Be wary of investments – Do your research if you plan on investing, particularly in investments found on social media. Ensure the provider is regulated by the Financial Conduct Authority and do your own due diligence. Otherwise you may lose all your money if it turns out to be a scam.
