APP fraud victims facing £3bn compensation shortfall

Victims of Authorised Push Payment (APP) fraud are facing a shortfall of £3bn in compensation, according to new figures published by Shieldpay.

Shieldpay, the secure payments solution, found that 4.2 million people in the UK had been caught out by scammers at some point in life through APP fraud.

The fraud occurs when someone is tricked into moving money from their own bank account directly into that of a fraudster. The figures revealed victims of APP fraud had lost £1,387 on average.

Shieldpay’s research, undertaken on its behalf by Opinium, surveyed 2,000 people in August 2019 and adjusted figures to nationally represent the UK population.

The survey revealed that victims of APP fraud who contacted their bank, building society or payment provider had received less than half of the total scam value back – just 48% – translating to a shortfall of £3bn in compensation received by victims. Furthermore, 15% were found to have received no compensation at all.

“Blameless victims of APP fraud are being left thousands of pounds out of pocket while fraudsters continue to let the good times roll,” Shieldpay CEO and founder, Peter Janes, said. “It shouldn’t be this way – the industry must do more to protect consumers.

“The voluntary code introduced last year is a positive step but compensating victims is simply firefighting without tackling the source of the problem. Fraudsters must be stopped in their tracks and consumers protected against transferring money into accounts which are held by scammers.”

A voluntary code introduced in May 2019 was designed to improve levels of compensation by banks, although just 46% of the Shieldpay survey’s respondents had heard of it, and a further 27% who did acknowledge hearing about it, indicated they didn’t understand the code.

The survey revealed victims were most likely to be targeted by fraudsters over the phone, with 27% suggesting this had happened to them. Other methods to part people from their money included 22% on social networking sites, 21% being contacted in person on their doorstep, 16% by clicking on a fake ad, 15% when making a purchase online, and 12% who were targeted on an online dating site.

Janes added: “Full identity verification and background checks, which raise red flags about a business or individual’s history, are the only way to make a dent in the sky-high levels of fraud the country is currently experiencing.

“The technology exists but it’s the responsibility of the individuals and the payments industry, including online marketplaces and banks, to put it in place.”

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