APP fraud in the app is costing us millions

Did you ever get that SMS saying a delivery was attempted but failed, or an email stating that you need to confirm details for a delivery or an in-app message to say 'approve this'? These are the primary ways in which scammers are targeting consumers to give their bank information voluntarily, when it is not the actual organisation they are pretending to be communicating with you.

The result? You give your bank information voluntarily to authorise the delivery and then discover you’ve been scammed. It’s called APP, Authorised Push Payment fraud, and is becoming the most common way to scam people after phishing and pharming. According to a survey by The Payment Association, 27% of UK payment companies believe APP scams now impact companies and customers more than any other type of fraud.

According to the latest report from the Payment Systems Regulator £459.7 million was lost to APP scams in 2023. That’s just in the UK. More than this, there are many ways to manipulate people through digital communication. It’s not just an SMS or email. This is illustrated well by this article on Forbes which details the scams, of which there are many:

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 £36.5 million of lost personal money in 2023.

Investment scams

This is when criminals convince victims to ‘invest’ with promises of high or guaranteed returns. In 2023, investment scams comprised a quarter of all APP fraud losses, totalling £107.8 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.

Lost pet scams

Scammers are claiming to have found missing pets, and demanding a ransom for their return, according to recent research by the credit reference agency Experian. These criminals scour lost pet forums to find missing animals, before demanding payment from worried owners. They often use images of the missing pet pulled from social media, or faked with artificial intelligence, in a bid to convince owners the animal has really been found.

APP is therefore a big issue for all of us.

How do you protect yourself? Well, luckily banks are working on the case. Ben Donaldson, Managing Director of Economic Crime at UK Finance, states:

“Our data shows that over 90 per cent of APP fraud starts online or over the phone, through social media, fake messages and calls.  Despite this, the technology and telecommunications sectors bear no responsibility for reimbursing victims. That needs to change and these sectors also need to tackle the criminal activity that proliferates on their platforms, sites and networks.”

On the other hand banks are proving to be supportive.

“Today’s data from the PSR shows reimbursement increased and the majority of authorised push payment (APP) fraud is reimbursed.”

So fraud online and via mobile is rising, consumers are duped into giving their data; internet providers and telecom and mobile firms face no responsibility means that banks and financial firms have to face the risks …

… c’est la vie.

 

Postscript: the Payment Systems Regulator said the volume of APP bank transfer scams increased by 12% to 252,626 from 2022 but the total value fell by 12% to £340.65 million in 2023. The report said 67% of money lost to such bank transfer scams was reimbursed in 2023.