Financial Ombudsman Service warns of increase in ‘hybrid’ scams

Of these, 10,985 were about authorised push payment (APP) scams. This is a 17% increase from the 9,370 APP scam complaints received in 2021/22.

In the last financial year, the Financial Ombudsman Service also saw a higher proportion of complex scam complaints. Over a third of the APP scam complaints were about investment scams, up from a quarter in 2021/22. The majority of these complaints include an element of cryptocurrency.

The Financial Ombudsman is now seeing increasing numbers of complaints which contain the features of more than one scam. ‘Hybrid’ scams are now common in romance scams, purchase scams, and ‘safe account’ scams.

• Romance scams – fraudsters meet their victim on a dating website and eventually the victim believes they’re in a relationship with them. The fraudster then persuades them they’re an expert in cryptocurrency trading. Due to the trust the victim has in the fraudster, and given their belief they’re in a relationship, they tend to follow the fraudster’s advice to invest in cryptocurrency which doesn’t exist.
• Buying goods that don’t exist – victims will attempt to make a bank transfer to purchase goods they’ve seen online – which don’t actually exist – and the fraudster tells them the payment is unsuccessful. After receiving this information, the victim will receive either a text or phone call from a fraudster impersonating their bank and the victim often makes multiple payments to the fraudster because someone pretending to be their bank is telling them that their payments aren’t going through.
• ‘Safe account’ scams – fraudsters impersonating reputable companies such as the customer’s bank or the FCA and telling their victims to move money to cryptocurrency accounts for safe keeping.

With this evolution and increase of ‘hybrid’ scams it’s really important that banks’ fraud prevention measures and warnings take account of the latest tactics by fraudsters and the risks.

Pat Hurley, Ombudsman Director at the Financial Ombudsman Service, said:

Fraud is not just a financial crime – it can have a profound emotional impact too. We continue to receive hundreds of complaints a week from victims of fraud and scams.

We are beginning to see more hybrid scams compared to a year ago. Fraudsters are always trying to stay ahead of the game by evolving their methods of scamming consumers and people should be extra vigilant.

The Financial Ombudsman Service is free for consumers and, if you think you have been treated unfairly by your bank, you should complain to the business first and then get in contact with our service, and we’ll see if we can help.

The uphold rate for fraud continues to remain higher than the Financial Ombudsman’s average for all financial products and services, which is 35%. The uphold rate for all fraud and scams, including APP scams, chip and pin fraud, ID theft and disputed transactions, is 45%. The uphold rate for APP scams is higher at 54%.

The Financial Ombudsman Service categorises APP scams into two categories – those impacted by the Contingent Reimbursement Model (CRM), the voluntary Code that some banking groups have signed up to, and those that aren’t impacted by the CRM.

The Financial Ombudsman is now receiving more complaints where the financial provider hasn’t signed up to the CRM. This is likely due to banks who have signed up to the CRM having better fraud prevention measures in place, as well as higher reimbursement rates for their customers.

Typically those cases that are impacted by the CRM have a higher uphold rate – it was around two thirds in the last financial year. This is because the CRM Code provides additional protection for consumers as banks must reimburse their customers unless there are exceptional circumstances. The Financial Ombudsman Service assesses each case against the standards set out by the CRM code, as one of its relevant considerations. Consumers whose cases aren’t impacted by the CRM have less recourse for reimbursement.  

Notes to editors

About the Financial Ombudsman Service

The Financial Ombudsman Service was set up by Parliament to resolve individual complaints between financial businesses and their customers on a fair and reasonable basis, as an alternative to the courts. It can look into problems involving most types of money matters. It is committed to sharing insight and experience to encourage fairness and confidence in financial services.