All the scams you need to be aware of – and what to do if you fall victim to fraud

Consumer rights expert Martyn James runs through all the latest types of scams doing the rounds, and what do to if you’ve fallen victim to fraud

Always be aware of scammers

Do you feel a little overwhelmed by fraudsters and scammers?

I write a number of columns every year about the latest types of fraud that occur – and what to watch to watch out for. Yet even if you are fully aware, it can still feel like fraudsters are running wild these days. There are reasons for this. We don’t know the number of people actively running scams in the UK (or from abroad). But a number of factors influence why con artists seem to be everywhere.

The rise of new digital innovations means scammers are finding a wider range of ways to exploit how we communicate, search online and shop.
Other types of technology make it easier to ‘mass spam’ people with fraudulent messages. Con artists can also easily pretend to be trusted organisations (number spoofing) or create convincing fake websites, emails and links.
We’ve become more reliant on online services for vital things like banking, spending and managing our money.
Fraudsters have upped their game and become more convincing, exploiting real life events, topical issues and demand for genuine services, in order to trick us out of our cash.

In short, it’s easier to con people en masse in 2024 – and at worst, the stakes can be exceptionally high. According to the latest report from the Payment Services Regulator (PSR), 252,626 people became victims of ‘push payment’ scams with a total value of almost £341million. Push payment or APP fraud is where you are tricked in to transferring money out of your own account by fraudsters.

The sums involved can be terrifyingly large. I’ve spoken to people who have lost their life savings, including one man who lost £100,000 and an older person who lost £120,000. A solicitor was tricked in to transferring the £350,000 profits from a house sale after the seller’s email address was hacked.

But this is the most extreme end of the scale. According to UK Finance, £1.17billion was reported stolen through all types of financial fraud last year. However, £1.2billion in fraud was spotted and prevented – which is good news for all of us. In this article, I’ll take a look at a few of the different types of fraud and what happens when you report them.

What happens when I need to report a fraud?

The moment you realise you may have been a victim of fraud, it can be incredibly distressing. The most important thing to do if money has left your account is to report it to the bank, card provider or e-payment service (like PayPal) urgently. Speed is of the essence but a follow these simple rules:

Hang up on any phone call or cut off any contact with someone who is telling you about a fraud attempt – they may be the fraudster. Make sure the phone call has terminated before redialling.
Get the correct fraud/emergency/card loss telephone number from the official website of the business (triple check you are on the right website).
If you are in a rush, feeling a bit flustered or have been tricked in to transferring a large amount of money, call the Stop Scams number – 159 – and you will be transferred to your bank or card provider.

It’s also important to have a quick think about what it is that you’re reporting:

Have you received goods you haven’t ordered but can’t see a payment for them on any of your accounts yet?
Is there just one transaction on your account you don’t recognise?
Are there a number of transactions on your account you don’t recognise?
Have you lost your card or has it been stolen?
Do you think your account or personal details have been hacked?
Have you been tricked in to transferring money or handing over your online banking details?

Asking these questions matters because different types of fraud require different solutions. A single transaction you don’t recognise might actually be genuine.

In cases like this you can ask the business for a bit more information about the transaction to see if it rings any bells. Failing that, they can try to “charge back” the money from the other bank. If the person or business that took your money can’t prove they have permission to do so, then that’s the end of the matter.

Sometimes terminology is important. For example, a “disputed transaction” is money that’s been taken from your account that you don’t recognise. “Fraud” is an allegation that someone has deliberately stolen cash from you without your permission. Ironically, disputing a transaction can be a quicker way to get your cash back as the process can usually be started immediately for debits from your account.

If you report fraud, then you’ll be passed to the business’ fraud team and a thorough – but possibly lengthy – investigation may take place. Some readers have also reported significant waits to speak to fraud specialists on the phone, so if time is of the essence, focus on recalling the money first.

What happens when you report fraud?

Chargeback and disputed transactions can be dealt with immediately if the situation is urgent, or the process can take a few days if you need to sign a declaration explaining what’s gone on. The vast majority of these transactions are processed quickly and easily. So the most important thing is to keep a close eye on all of the accounts you use to pay for goods and services. And regularly change your password, of course.

When a fraudster has got hold of your account details, “clusters” of fraud usually occur. This is a pretty low-tech scam: you’ll find that the fraudsters change the address on the account they hacked and go on a spending spree. Trainers and electronics seem to be the main targets for these fraudsters as they are easy to resell. This is an obvious pattern of fraud and most financial businesses will spot and intercept these clusters of suspicious transactions.

With clear patterns of fraud, you’ll usually be refunded everything that’s been stolen, unless you’ve been particularly lax around reporting a lost or stolen card. So with the majority of relatively low value frauds, you’ll get a full refund as long as you report the matter promptly. But there are exceptions.

If the card provider feels that you’ve been “grossly negligent”, participated in the fraud or allowed your private card or online banking details to be compromised, they can refuse to refund you. This doesn’t make it right, but it does happen. It goes without saying that some businesses are more reluctant to refund when the amount stolen hits the thousands.

Authorised push payment fraud: losses of £459.7million in 2024

Authorised Push Payment (APP) fraud is the most common method of scamming large sums of money from people. This is where a fraudster, usually pretending to be from a bank or financial organisation – or a trusted service like the police – tricks you in to transferring large sums of money out of your account or gets you to hand over the password to your bank or card accounts.

There are a range of different ways this scam works, but usually you are contacted and told your account has been compromised and you need to transfer money to a new account that’s been set up so your cash is ‘safe’. In some awful examples, this may even involve someone pretending to be from your bank or the police coming to your door. I have seen cases where the fraudster has accompanied their victim to the bank to make the transfer.

You may think you might not fall victim to this type of fraud, but I have listened to tapes of fraudsters in action and they are exceptionally convincing – often pretending to be senior managers to whom the initial call has been “escalated”. They grind people down the longer they stay on the phone. And with good reason, because the con artists can walk away with huge sums of money.

When you transfer money to the new account, it almost immediately gets transferred out again by the fraudsters. This is done by using a number of smaller transactions that are designed to slip unnoticed under the receiving bank’s radar. This is where I believe the banks could be doing more. This is an obvious patten of fraud and should clearly flag up as a warning to banks. But as yet, there seems to be no desire to introduce a short ‘holding period’ while high value transfers are checked before being released.

How do businesses deal with complaints about APP fraud?

The Payment Services Regulator has just published its annual report, highlighting which businesses pay out the most compensation for stolen push payment fraud – and which ones pay the least. Find out hour your bank is doing here.

It’s worth noting that some businesses don’t feature on the list because they aren’t technically banks. These online services can look and seem like a bank, but they are basically ‘pre-loaded card accounts’ where you load the account up with cash to spend. This is confusing and very misleading – and some of the worst refund offenders are in this category too.

If you’ve been defrauded, the business must investigate what’s happened and if you’ve been careless in allowing the fraud to happen. But they must also ask if they could have done more to spot and stop the fraud too. This includes both your bank and that of the recipient bank too. Sometimes compensation will be split 50/50 between both banks where appropriate.

There is an industry code covering compensation for these cases and the rules businesses should follow. This is known as the Contingent Reimbursement Model (CRM) Code. As we can see in the PSR data, many complaints get turned down by businesses. But don’t worry! The Financial Ombudsman Service (FOS) can investigate to see if you’ve been treated fairly. They can and do tell banks and businesses to refund you too.

What are the different types of fraud?

Card fraud: losses of £551.3million in 2023.

Card fraud covers loads of things, including spending on lost or stolen cards, cards that get nicked before you receive them, fake and counterfeit cards and remote purchase fraud (where fraudsters pinch your card details and use them to shop online, on the phone or through mail order).

There’s also card ID theft, where fraudsters use data harvested online or through hacking to either apply for a card using your details, or to take over your account after finding a way to break in to it.

Finally, there are the face-to-face scams. This is where scammers “shoulder surf” to spot your pin, then nick your card. Alternatively there is the “Lebanese loop” or “card entrapment” scam, where a fake ATM cover is attached over a genuine machine, allowing them to steal the card.

Cheque fraud: losses of £5.6million in 2023

Millions of cheques and drafts are still issued every year (ask your parents), though the amount stolen has dropped considerably over the years.

Different types of fraud include: fake cheques and drafts, amended cheques and forgeries.

Unauthorised remote banking fraud: losses of £151.8million in 2023

Remote banking simply means financial services that you don’t have to be physically present to use. These are: internet, telephone and mobile banking services. Remote banking fraud exists in a wide range of formats, but mainly refers to attempts by scammers to get their hands on your log in details or accounts by tricking you in to handing the information over.

Other scams

It’s not just the method of fraud that matters, sometimes it’s the different categories of scam that you need to watch out for. These include:

Romance scams. Where fraudsters pretend to be a potential partner to get you to send money.
Investment scams. Where you are cold-called and pressure sold a ropey or non-existent form of high-risk investment, from cryptocurrency to investing in land abroad.
Advance fee scams. Where you are persuaded to pay a fee to gain access to a much bigger sum of money or goods.
Invoice or conveyance scams. Where people are tricked in to handing over sums of money after the fraudster hacks and email or website and changes the payment details for invoice payments. Sadly, there are many, many other scams to watch out for.

A quick guide to the main organisations that help us tackle fraud

UK Finance: UK Finance represents over 300 businesses in the financial services industry. It publishes loads of data about how we spend our cash – and the definitive reports on fraud.

Payment Services Regulator (PSR): The PSR are in charge of regulating (most) of the payment services we use to pay for day-to-day goods and services – from cheques to card payments.

The Financial Services Authority (FSA): The FCA is the regulator of the financial services industry.

The Financial Ombudsman Service (FOS): The FOS is the free and impartial alternative to the courts. The Ombudsman is the organisation you go to if you are unhappy with the way a complaint about financial services has been handled.

Action Fraud: Action Fraud is the UK’s national reporting centre for fraud and cybercrime where you should report fraud if you have been scammed.

Stop Scams: Stop Scams offer a number – 159 – you can safely call if you are worried you’ve been defrauded and don’t know how to contact your bank or card provider.