Increasing APP Fraud:
Are Tech Firms Doing Enough?

Authorised Push Payment (APP) fraud is a crime committed by scammers to gain money from victims under false pretences. APP fraud involves the transfer of money from the victim’s bank account through online or telephone banking.

Fraudsters most commonly target people via online platforms, such as Facebook and WhatsApp, virtual marketplaces, or by phone calls, emails, or text messages.

Clever social engineering tactics and impersonation is often used to lure victims into building trusting relationships with the scammers. Types of APP fraud include romance, investment, and employment scams. In these cases, victims are tricked into false relationships, promised unrealistic returns on fake investment schemes, or the hope of an exciting job opportunity that does not exist.

No matter what type of APP fraud, the victim is always convinced to send money from their bank account to the fraudsters. The victim authorises payments directly from online and mobile banking apps, and the money is sent instantaneously. Once the money is transferred, it is moved on to another account in the scammer’s control, usually overseas, making it virtually impossible to recover.

Manipulative tactics are often used to prey on people’s emotions, rushing them into making impulsive decisions. Keep the following tips in mind to protect yourself against online fraud:

• If something seems too good to be true, exercise caution.
• If you feel rushed into making a decision, take a step back. Legitimate institutions will never pressure you or present time-sensitive opportunities.
• All legitimate financial institutions will be on the Financial Conduct Authority (FCA) register. Always check the contact details and FCA authorisation status if you have never heard of the organisation before.
• If you are unsure about something, get a second opinion from a family member, a friend or professional adviser.
• Always double-check the source if you have received an unsolicited message on a social media platform.
• Treat email and message links with caution and always use your bank’s official website/app to log in and make transactions/communications.
• Never allow any external software to be downloaded on to your devices, such as screen sharing platforms.

If you think you or a loved one have become a victim of investment fraud or any other APP fraud, it’s important you complete the following steps right away:

• Firstly, contact your bank immediately to make them aware of the situation. Your bank should start an investigation and determine whether your case qualifies as APP fraud. If so, you are entitled to a refund from your bank.
• Contact the police and Action Fraud, the National Fraud and Cyber Crime Reporting Centre. Reporting your case will help prevent the same thing happening to other people in the future.
• Be aware of the Authorised Push Payment Reimbursement Scheme introduced by the Payment Systems Regulator (PSR) to ensure victims of fraud are compensated quickly. The scheme enforces a mandatory reimbursement within five working days, provided they meet the criteria of APP fraud and their claim is not more than £85,000.
• If your bank decides not to compensate you and you disagree with their decision, you may be able to file a complaint with the Financial Ombudsman Service (FOS).

In October 2023, the Online Safety Act was introduced, and Ofcom has published a roadmap of implementation plans. The Act enforces protection against harmful online content, including fraud. More onus is therefore put on companies to create systems to remove illegal content when it appears on their platforms.

In November 2023, an Online Fraud Charter, a voluntary agreement between the government and tech companies to reduce online fraud, was signed by major social media platforms like Meta (who owns Facebook and Instagram). By signing the Charter, key tech companies demonstrate that they recognise the risk of fraudulent activity on each of their platforms and commit to reducing such risks for their users and members. While in essence the Charter was a positive step, with no real consequences for breaching it, many companies have been slow to impose necessary steps to tackle fraud on their platforms.

Sarah Spruce, Legal Director and Head of the APP Fraud team at TLW Solicitors, commented:

“Whilst seeing that fraud is happening on such a large scale online is disheartening, it raises an important conversation such as the one recently held within the House of Commons on preventing online fraud.

The internet, especially social media, is a major tool for fraudsters and recent FOS data indicates a significant rise in complaints where people saw fake or misleading investment opportunities on social media. There have already been positive steps with the government’s fraud strategy and the phased implementation of the Online Safety Act, however, more needs to be done by technology firms to reduce the risk of fraud for their users.

Given how high level the debate about this has gone shows how prolific the scammers have become. For many, this may feel overwhelming, however, I would reassure anyone that has fallen victim to a scam online that they are not alone, help is available. If you or a loved one have lost out to a scam, get in touch with a member of my specialist APP Fraud team who will have a no obligation discussion about your case and explore whether you may be eligible to make a ‘no-win, no-fee’ claim.”