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  • Writer's pictureMax Austin

Complex scams on the rise warns Financial Ombudsman Service

Updated: Mar 21

More than 21,900 fraud and scam complaints were received by the Financial Ombudsman Service last year, with the majority being related to authorised push payment (APP) scams

Max Austin, Reporter, Accountancy Daily

In the last financial year, the Financial Ombudsman Service received 21,918 fraud and scam complaints, up by almost a fifth when compared to the 18,450 complaints it received in 2021.

Around half of the latest fraud complaints (10,985) were about APP scams, an increase of 17% from the 9,370 APP scams received in the previous year.

In an APP scam, a criminal will trick their victim into sending money directly from their account to an account which the criminal controls.

Losses due to APP scams were £583.2m in 2021, according to a report by UK Finance. This was split between personal (£505.8m) and non-personal or business (£77.4m).

Over a third of the APP scam complaints were about investment scams, up from a quarter in 2021/22. The majority of these complaints included an element of cryptocurrency.

The Financial Ombudsman is also seeing a rise in ‘hybrid’ scams, which contain the features of more than one scam, and are common in romance scams, purchase scams, and ‘safe account’ scams.

William Christopher, civil fraud partner at Kingsley Napley, said: ‘The Financial Ombudsman Service saw a higher proportion of complex scam complaints last year compared with previously. This accords with our experience from the enquiries we receive as a firm. Often the scams are simply classic investment scams, with a crypto badge, whereby victims are attracted by the promise of large returns.

‘These are usually on online platforms which purport to have generated huge (but fictional) profits for the investor, and when the victims ask to withdraw the profits made, they are then faced with an advance fee fraud, namely the need to pay some kind of fee, for example for tax, before the funds can be released.

‘In reality, no profits have been generated at all, and the original investment has simply been stolen, as will the advance fee if paid.’

The uphold rate of fraud continues to remain higher than the Financial Ombudsman’s average for all financial products and services, which is 35%. The upholding rate for all fraud and scams, including APP scams, chip and pin fraud, ID theft and disputed transactions, is 45%. The uphold rate for APP scams is higher at 54%.

The service also said it is receiving more complaints where the financial provider has not signed up to a voluntary reimbursement code, which many banks and building societies are signed up to.

Christopher added: ‘Sadly, anyone can find themselves a target from teenagers to the most sophisticated financial professionals. The fraudsters are often based overseas compounding the difficulty of redress via criminal means or otherwise.

‘However, there are sometimes steps that can be taken via a civil law route such as obtaining freezing injunctions and search orders so it is certainly worth considering such, especially where losses are sizeable. Fraudsters thrive on the idea they are beyond the law but that need not always be the case.’

Pat Hurley, Ombudsman director at the Financial Ombudsman Service, said: ‘Fraud is not just a financial crime – it can have a profound emotional impact too. We continue to receive hundreds of complaints a week from victims of fraud and scams.

‘We are beginning to see more hybrid scams compared to a year ago. Fraudsters are always trying to stay ahead of the game by evolving their methods of scamming consumers and people should be extra vigilant.

‘The Financial Ombudsman Service is free for consumers and, if you think you have been treated unfairly by your bank, you should complain to the business first and then get in contact with our service, and we’ll see if we can help.’

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