A new report from the Payment Systems Regulator shows how fraudsters exploit major platforms to scam consumers.
APP scams happen when victims are tricked into sending money to fraudsters posing as legitimate payees.
The PSR’s data shows that in 2023 alone, APP scams cost UK consumers £341 million. Victims report losing trust not only in banks but also in the platforms fraudsters use to contact them - 41% of victims said their trust in social media companies had been shaken, four times as many as those who lost trust in traditional banks.
While new rules on reimbursement of victims are intended to encourage banks to take action to stop fraud before it happens, the watchdog says social media, telecoms, online marketplaces and other platforms must also understand how fraudsters reach victims and take steps to stop them.
To combat the threat, the PSR is calling on technology, telecoms, and social media platforms to work with payment firms to close down vulnerabilities that fraudsters exploit.
Kate Fitzgerald, the PSR’s head of policy, comments: “Our report highlights how major platforms are being exploited by fraudsters to deceive victims, often with devastating effects. By publishing this data, we want to drive real change across industries, tackling the root causes of APP scams. Preventing scams before they happen is the best way to protect consumers and reduce harm.”
NatWest has recently warned that APP fraud reimbursement rules are already changing the tactics deployed by scammers.
“We can see a shift from high value stuff to volume [and] we are seeing a lot of displacement into cards,” says Nick Perkins, Natwest's director of fraud prevention. “Every time you plug one set of gaps, you find some new ones.”
Claire Simpson, senior manager of policy at the PSR, says that one of the unintended consequences of the organisation’s new policy is the increase in fraud in other areas of payments.
“It was an intended consequence that it would be harder to commit fraud via APPP over faster payments and apps, that’s quite intentional,” she says. “But we are the economic regulator for all payment systems so we are keen to engage on whether there is a significant shift and we’re now seeing that materialise.”
The watchdog believes that ultimately greater data sharing and collaboration across industries is essential to stop scams earlier in their lifecycle.
Perkins agrees, stressing that APP regulation is a “progressive step” in addressing fraud but that it is only a small step on a longer journey.