Two-thirds of the UK’s payments industry, made up of banking providers, crypto services, and technology companies, think the scam is the most pressing type of fraud issue.
Of the 13 types of fraud, the ones involving APP are the type that impacts companies the most, according to a quarter of the businesses asked by The Payments Association’s survey.
The scams, which involve tricking victims into sending money to someone they believe is a legitimate person or business, have skyrocketed in the last few years.
It led to the Payment Systems Regulator (PSR) introducing new rules set for October that mean payment service providers involved in the transaction are liable for any losses to customers through APP fraud.
The decision, announced in December, will cover you for up to £415,000 per claim if you have been a victim of an APP scam.
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Last year, fraud victims lost £1.2bn to scammers, with £459.7m through APP scams, a 12% rise in the amount of those cases to total just under a quarter of a million (232,429), while the amount lost slightly dipped on the year before.
Riccardo Tordera, director of policy and Government relations for The Payments Association, says the fraud type “is in many ways one of the least sophisticated forms around”.
However, the issue comes with the ease at which a message can be circulated by a scammer.
‘Scale of APP fraud is most worrying’
Tordera said: “Often, APP fraud attempts can be as simple as a text claiming to be from a bank asking for funds to be transferred.
“The problem stems from how many people a fraudster can target with that message: years of data leaks mean that bad actors can get tens of thousands of phone numbers for very little, and if a fraud attempt is only 1% effective, it could still cost hundreds of people thousands of pounds. In short, it isn’t the sophistication but the scale of APP fraud that is most worrying.”
As part of the changes by the PSR coming into effect in October, the payment service provider involved in an APP scam claim has to prove the customer involved acted with what’s deemed as gross negligence.
However, The Payments Association wants this removed and for businesses to show customers they will take more responsibility and show they acted with “general negligence” instead before receiving a refund. This is so customers learn more about the dangers of APP scams.
Tordera added: “It doesn’t make sense and could have the effect of devaluing consumer education around fraud and scams if a refund is guaranteed. If a claim is to be reimbursed, it should require having been reported to the police in the first instance, regardless of how much the claim is for.
“At the very least, this will serve to educate the police force on the issue, which clearly isn’t happening enough at the moment. But more importantly, there needs to be more support in educating consumers to prevent fraud and scams in the first place.”
