One of the most persistent and worrying types of digital fraud, APP fraud continues to dominate the news cycle.
Authorised push payment fraud, or APP fraud, cost individuals and businesses in the UK nearly £460 million in 2023 alone. That’s a staggering amount of money – and a significant proportion of the total £1.7 billion lost to fraud during the same year.
APP fraud isn’t new. Driven by the rise in online banking and digital payments, it began to gain traction in the UK in 2014. By 2017, UK Finance started collecting detailed data on APP fraud, and in 2019, banks implemented a voluntary code of practice to help reimburse victims under specific circumstances.
Unfortunately, the code didn’t halt the rise of APP fraud. In fact, losses rose sharply in 2019, driven by a rise in impersonation scams, investment fraud and online shopping scams during the pandemic. They then continued to increase year upon a year, hitting a peak in 2021 before declining slightly in 2022 and 2023.
So, are we out of the woods? In a word, no. Some experts believe we’re riding another wave, this time driven by deepfake technology and scammers’ determination to go after “big fish” as well as ordinary individuals.
What is APP fraud?
APP fraud (Authorised Push Payment fraud) is a type of scam where a victim is tricked into willingly sending money to a fraudster. The scammer convinces you to make a payment to what you believe is a legitimate account, but it’s actually controlled by the criminal. Because you authorised the payment yourself, it can be tricky to get your money back.
Is APP fraud the same as a romance scam?
Romance scams are a type of APP fraud where fraudsters prey on victims by building fake romantic relationships, often through online dating platforms or social media. The scammers invest time in gaining the victim’s trust, presenting themselves as caring and supportive partners.
Once they establish trust, they manipulate the victim emotionally and ask for money, often claiming it's for an emergency like medical bills, travel costs or business problems. These scams can continue for months or even years, with the victim believing they are helping someone they care about. Tragically, many victims lose substantial sums before realising the relationship was a lie.
Romance scams are particularly dangerous because they exploit the victim's emotional vulnerability, making them harder to spot compared to more direct types of fraud.
What are the different types of APP fraud?
There are several types of APP fraud, each with different tactics but the same end goal: convincing you to transfer money to a fraudster’s account.
Impersonation Fraud
Scammers pose as someone you trust, like a bank representative, police officer, or even a family member, and convince you to transfer money to a "safe account".
Investment Scams
Fraudsters offer fake investment opportunities with promises of high returns. They might even send convincing paperwork or fake websites to appear legitimate.
Romance Scams
As we mentioned above, this type of fraud involves building a fake relationship over time to gain trust and then asking for money.
Purchase Scams
Here, you're tricked into paying for goods or services that don't exist, like fake items advertised online. Once the payment is made, the goods never arrive.
CEO Fraud
In this scam, criminals impersonate one or more of a firm’s senior executives, convincing employees to make urgent payments, usually for fake invoices or services.
How can you spot APP fraud?
Spotting APP fraud can be tricky because fraudsters can be extremely convincing. Here are some warning signs.
Urgent requests for money or personal information.
Emails, texts or phone calls from unfamiliar numbers, even if they claim to be from someone you trust.
Requests to make payments into unfamiliar or new accounts.
Emotional manipulation, especially in romance or family-related scams.
If something feels off, take a moment to verify the request, even if it's supposedly coming from someone you know.
What should I do if I’m a victim of APP fraud?
If you’ve fallen victim to APP fraud, act quickly.
Contact your bank immediately to report the fraud and try to stop the payment.
Report the scam to Action Fraud (the UK’s national fraud and cybercrime reporting centre).
Gather evidence. Save any emails, text messages or phone numbers related to the scam. This information can help with an investigation later.
What are financial institutions doing to prevent APP fraud?
Banks and other financial institutions are working hard to reduce APP fraud by:
Raising awareness. Many financial institutions regularly send out fraud prevention advice to customers. It’s worth reading this to stay up to date with the latest fraud trends.
Implementing fraud prevention systems. In late October 2024, confirmation of payee (CoP) systems became mandatory at many financial institutions. These check that the account name you’re sending money to matches the account holder’s name.
Offering reimbursement schemes. In autumn 2024, the Payment Systems Regulator (PSR) introduced its APP fraud reimbursement scheme. We'll cover this in more detail below.
What is the APP fraud reimbursement scheme?
The PSR’s APP fraud reimbursement scheme came into force in the UK on October 7th, 2024. Individuals, microenterprises and charities that fall victim to APP fraud are now entitled to receive their money back, providing they haven’t acted carelessly.
Initially, the PSR proposed a maximum reimbursement amount of £415,000, but it reduced this to £85,000 after pushback from financial institutions.
Key features of the scheme include:
Mandatory reimbursement. Banks and PSPs must reimburse victims unless the customer has been grossly negligent. This removes the burden of proof from the consumer.
Collaboration with the Contingent Reimbursement Model (CRM). The scheme builds on the CRM code, a voluntary initiative launched in 2019, aimed at making reimbursements faster and fairer for APP fraud victims.
Consumer Duty compliance. The scheme supports the Financial Conduct Authority's (FCA) Consumer Duty rules, requiring firms to act in their customers' best interests and prevent foreseeable harm.
It’s important to note that only payments made within the United Kingdom qualify for the APP fraud reimbursement scheme. If the scammer’s account is in another country, fraudulent payments to it fall outside the scope of the scheme.
Staying vigilant can protect your finances
One of the most persistent and worrying types of digital fraud, APP fraud continues to dominate the financial news cycle in the UK. From romance scams to CEO impersonation, its intent is the same: convincing victims to transfer as much money as possible to the fraudster’s account.
Recent measures, including a voluntary agreement in 2019 and the PSR’s new reimbursement scheme, introduced in 2024, aim to combat APP fraud and refund consumers if they’re scammed.
With that said, vigilance remains the best way to stop APP fraud before it happens. Always verify payment requests, and if something feels off, trust your instincts and double-check.
To learn how Interpolitan’s dedicated relationship management can help keep your funds safe, get in touch today.