What is an Authorised Push Payment (APP) fraud or scam?

Authorised Push Payment (APP) fraud is the most common type of financial scam in the UK, costing the economy roughly £459.7 million in 2023 alone. It works simply by tricking individuals and businesses into sending money under false pretences

With new protections taking effect on 7 October 2024, NMTBP tells you all you need to know about APP fraud, including how to avoid it and how to get your money back if you fall victim

Every year, thousands of people and businesses are victims of APP fraud. Common types of APP fraud include:

• Purchase fraud, where criminals pretend to sell things that don’t exist.
• Impersonation fraud, where criminals claim to be someone from a bank, the police or another trusted organisation to steal money
• Investment fraud, where you’re convinced to move your money into a fictitious fund or to pay for what later turns out to be a fake investment.
• Romance fraud, when criminals use a fake dating profile to start a relationship with you and then ask for money.
• Invoice fraud, where fraudsters send false invoices

How to avoid APP fraud

By learning to spot the manipulative tactics employed by APP scammers, consumers can protect themselves. Here are a few key warning signs that you may be looking at a scam:

• An offer is too good to be true: APP scammers often lure in consumers with promises of cheap deals. If something seems too good to be true, it probably is
• Communication seems strange: One common tactic APP fraudsters use is impersonating a legitimate business or government body. If you receive a communication from a familiar organisation that doesn’t seem right, get in touch directly to check if the communication was from them
• You’re feeling pressured: Fraudsters may often manipulate would-be victims by pressuring them to act quickly, with promises of limited-time offers or warnings of negative consequences if action isn’t taken. If you are being asked to transfer money or provide personal details urgently, you may be the target of a scam
• You’re being asked to use an unusual payment method: If a company you have dealt with in the past is asking you to use a new payment method, the request might not be legitimate. If in doubt, it’s best to get in touch with the company directly
• You’ve been asked for personal information: If you receive an email or text message asking you to provide personal information such as a password or address, do not provide them. Genuine companies will never ask you to send these details over text or email

What protections are in place for consumers?

On 7 October 2024, the Payment Systems Regulator (PSR) launched new rules which require payment service providers to refund customers if they fall victim to APP fraud. It means:

• Everyone making a payment via Faster Payments or CHAPS from one UK bank account to another will be covered

• The vast majority of consumers will be reimbursed within five business days of making their claim, with over 99% of claims by volume covered

• Individuals will be covered up to £85,000 as standard, but banks and payment firms can opt to reimburse above that amount. Firms may also choose to apply an optional excess of up to £100, although this must not be applied to vulnerable consumers

• Anyone who suffers a loss exceeding £85,000 can still raise their case with their payment provider. If they are not satisfied with how it’s handled, they can take their case to the Financial Ombudsman Service

What isn’t covered by the new rules

• If you paid using a payment type other than Faster Payments or CHAPS. For example, cash, a cheque, or a credit, debit, or prepaid card
• International payments
• It is a civil dispute, not fraud. For example, if you’ve paid a genuine retailer or business but you’re not satisfied with the product or service you have received
• You have acted fraudulently yourself – including if you have lied or misrepresented your circumstances for financial gain
• If you’ve acted with gross negligence. For example, by ignoring warnings from your bank that the payment was likely to be a scam
• It’s a payment to or from an account with a credit union, municipal bank, or national savings bank (state-owned savings bank in the UK).
• It’s a payment you have made to another account that you control
• The payment you made is unlawful. For example, if the payment was for an illegal item
• Payments made before 7 October 2024 or more than 13 months before your claim is raised

What should I do if I’ve been scammed?

If you believe you’ve been a victim of APP fraud, contact your bank immediately to report it. It may be able to block the transaction or trace the money

You can also report the scam to Action Fraud online or by telephone at 0300 123 2040 (Monday to Friday, 8 am to 8 pm). The service is run by the City of London Police and the National Fraud Intelligence Bureau. It will report the incident and offer help and support

In 2023, before the new PSR regulation came into effect, around 62% of APP fraud losses (£287.3 million) were reimbursed to victims

However, according to data from the PSR, Lloyds Banking Group fully refunded less than half (49%) of reported APP fraud cases in 2022, while online-only bank Monzo fully refunded just 6%

If you’re unhappy with the way your provider has handled a fraud report, you can contact the Financial Ombudsman Service to complain. If you make a credit card purchase that turns out to be fraudulent, you may be protected under section 75 of the Consumer Credit Act. This means if you make a credit card purchase worth between £100 and £30,000, which is not as advertised or never materialises, you can contact the credit card issuer and request a full refund

As always, caveat emptor!