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What Is APP (Authorised Push Payment) Fraud?

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Authorised Push Payment (APP) fraud is the most common type of financial scam in the UK, costing the economy almost £240 million in the first half of this year alone. 

It works simply by tricking individuals and businesses into sending money under false pretences. 

Here’s what you need to know about APP fraud including how you can avoid it, and how to get your money back if you fall victim.

What is APP fraud?

During an APP scam, criminals manipulate their victims into making payments, or sharing personal details, under false pretences. Often fraudsters will pose as well-known legitimate business or government body in order to win a victim’s trust.

These scams are called ‘authorised’ because they depend on the victim voluntarily transferring money.

But this does not mean the victims of APP fraud are to blame – and if you’ve fallen prey, you may be able to claim back your losses (more on this below).

Where could I encounter APP fraud?

According to the latest data from UK Finance, more than three-quarters (77%) of APP fraud originates online. However, online fraud only accounts for just under a third (32%) of APP-related losses.

Instead, most lost cash tends to originate from cold calling. For example, APP scams where the victim was contacted via telephone represent just 17% of cases but account for 45% of losses, according to UK Finance data.

Types of APP fraud

The label ‘APP fraud’ covers a broad spectrum of scams. Here are some of the most common to look for:

Impersonation scams. This is where criminals pose as a legitimate company – anything from a delivery firm, retailer or tradesperson – to trick consumers into transferring them money. 

Impersonating HMRC is also a prominent scam, especially in the run-up to self-assessment deadlines. Fraudsters may cajole victims into sharing details through bogus fines or rebates.

Purchase scams. With a purchase scam, fraudsters offer goods and services that never materialise. This type of fraud is typically carried out online, often through social media or fake websites that mimic legitimate brands.

Romance scams. This is when imposters enter into an online relationship with their victim before requesting money, often using an emotionally manipulative ‘backstory’. According to UK Finance data, romance scams accounted for £18.5 million of lost personal money in the first half of 2023.

Investment scams. This is when criminals convince victims to ‘invest’ with promises of high or guaranteed returns. In the first half of 2023, investment scams comprised a quarter of all APP fraud losses, totalling £57.2 million.

Loan fee scams. During a loan fee scam, criminals charge victims an administration fee for a loan they never receive. According to the Financial Conduct Authority (FCA), this type of fraud costs the average victim £260. It tends to be more prevalent during the summer months, when consumers may turn towards credit to cover extra costs such as holidays and summer childcare. 

APP fraud losses

According to figures from industry body UK Finance, APP fraud losses totalled £239.3 million in the first half of 2023. The majority of these losses (£196.7 million) were borne by consumers. 

A total of 112,459 cases were reported to UK Finance by financial services providers, marking a 22% increase compared during the same period in 2022. 

Ben Donaldson, managing director of economic crime at UK Finance, said that the increase of ‘purchase scams’ – which totalled 77,000 cases in the first half of the year – was partly behind the rising figures.

He said: “More people are shopping online than before, and during the current cost of living challenges, people might be more likely to fall for deals that are too good to be true.”

However, an increase in the reporting of APP-related fraud may also account for the increase in figures. Kate Fitzgerald, head of policy at the Payment Systems Regulator, commented: “There’s growing awareness around consumer protection which gives victims greater confidence about how they’ll be treated if they report the scam – making them more likely to do so.”

How to avoid APP fraud

By learning to spot the manipulative tactics employed by APP scammers, consumers can protect themselves. Here are a few key warning signs that you may be looking at a scam:

An offer is too good to be true: APP scammers often lure in consumers with promises of cheap deals. If something seems too good to be true, it probably is.

Communication seems strange: One common tactic APP fraudsters use is to impersonate a legitimate business or government body. If you receive a communication from a familiar organisation that doesn’t seem right, get in touch directly to check if the communication was from them.

You’re feeling pressured: Frausters may often manipulate would-be victims by pressuring them to act quickly, with promises of limited-time offers, or warnings of negative consequences if action isn’t taken. If you are being asked to transfer money or provide personal details urgently, you may be the target of a scam.

You are being asked to use an unusual payment method: If a company you have dealt with in the past is asking you to use a new payment method, the request might not be legitimate. If in doubt, it’s best to get in touch with the company directly. 

You have been asked for personal information: If you receive an email or text message asking you to provide personal information such as a password or address, do not provide them. Genuine companies will never ask you to send these details over text or email.

Ms Fitzgerald, from the Payment Systems Regulator (PSR), advised: “Before you make a payment, take some time to think about whether it is right – and call your bank if you’re unsure.”

Anti-fraud regulation

Banks are fast-implementing anti-fraud systems to combat the growing problem of APP fraud – such as warning customers if it looks like they are about to make a bank transfer that is suspicious. 

Banks are also increasingly employing Confirmation of Payee (CoP) which cross-references the name of the person a consumer believes they are paying, with the name attached to the receiving account. According to the Payment Systems Regulator, CoP will be applied to almost all consumer payments by October 2024.

Payment provider Mastercard also recently introduced an AI tool for banks that uses historical spending behaviour to scan for signs of fraudulent activity. 

In August 2023, financial regulator the FCA, placed a total ban on financial cold calls. This means you should consider any unexpected phone calls about your finances to be a scam.

However, sophisticated fraudsters continue to develop tactics to circumvent restrictions which means consumer education and vigilance lies at the heart of the battle. 

What should I do if I’ve been scammed?

If you believe you’ve fallen victim to APP fraud, contact your bank immediately to report it. It may be able to block the transaction or trace the money. 

You can also report the scam to Action Fraud online or by telephone on 0300 123 2040 (Monday to Friday 8am to 8pm). The service is run by City of London Police and the National Fraud Intelligence Bureau. It will make a report of the incident and offer help and support.

Even if you’ve not been scammed, it’s worth checking to see if your bank is signed up to the APP voluntary code. Introduced in May 2019 it means that, so long as customers have met the required security standards, they will be fully reimbursed by their bank.

Around £128.7 million was reimbursed to victims under the Code in the first half of 2023, which is just over half of the £239.3 million in losses over the same period.

According to data from the PSR, Lloyds Banking Group fully refunded less than half (49%) of reported APP fraud cases in 2022, while online-only bank Monzo fully refunded just 6%.

If you’re unhappy with the way your provider has handled a fraud report, you can contact the Financial Ombudsman Service to complain.

If you make a credit card purchase that turns out to be fraudulent, you may be protected under section 75 of the Consumer Credit Act. This means if you make a credit card purchase worth between £100 and £30,000, which is not as advertised or never materialises, you can contact the credit card issuer and request a full refund.

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