The Financial Conduct Authority (FCA) this week revealed that over 116,000 people in the UK have fallen victim to APP fraud and scams in the first six months of 2023.
APP scams – where someone is tricked into sending money to a fraudster posing as a genuine payee – have seen an uptick this year due to people becoming more vulnerable in the current cost-of-living crisis, according to the FCA.
Anna Roughley, Head of Insight at the Lending Standards Board (LSB), believes that this increase in APP scams shows there is an “urgent need” for the industry to focus on developing fraud solutions to halt this dangerous growth.
She stated: “Victims of APP scams often face lasting emotional and psychological distress, so there is an urgent need for the industry to focus on fraud detection and prevention.”
The UK’s financial watchdog stated it is “working with payment service providers to do more to protect consumers from fraud”, in particular APP fraud.
Upon revealing its findings, the FCA outlined some key initiatives that companies should be focusing to help halt the spread of scams and fraud attacks:
- Firms can do more to strengthen their systems designed to detect and prevent fraud.
- There is not enough focus on delivering good customer outcomes in many firms.
- Some firms could do more to improve the support they offer to victims of fraud.
- Poor complaint handling, including firms often taking too long to respond. Customers were provided with decision letters that were sometimes unclear, confusing, or included unhelpful and, on occasion, accusatory language.
“The FCA has emphasised the need for payments service providers to continue to develop their defences against fraud and ensure their control frameworks are fit for purpose, reinforcing the need to maintain an industry code that has a clear focus on the prevention and detection of APP fraud,” added Roughley.
“The industry must do all it can to ensure scams are prevented, while providing an increased level of protection for vulnerable customers.”
In regards to improving customer treatment, such as how complaints are handled, the FCA has guided firms to take an overview of its Consumer Duty guidelines, as well as the ScamSmart campaign to educate companies on the risks of fraud.