Authorised Push Payment (APP) fraud is a scam where victims are misled into sending instant funds to con artists, often through social engineering tactics that involve impersonation. These scams can take various forms, such as romance scams, where victims are deceived into paying for non-existent relationships, or investment scams, where money is sent for fictitious investment opportunities.
Scammers build trust with their victims, posing as trusted figures like lawyers, accountants, friends, family members, romantic interests, or business partners. Using manipulative methods and deception, they convince the victim to transfer money urgently and sometimes regularly from their bank accounts.
As victims believe these transfers to be genuine, they often realise they've been scammed too late, and embarrassment may prevent them from seeking help. These payments are typically sent overseas, complicating the tracing and recovery of the lost funds.
The rise of real-time payment systems has facilitated APP fraud for cybercriminals. Once money is transferred, it's irretrievable once the victim discovers the fraud, making APP scams particularly damaging and challenging to counteract.
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When criminal proceedings result in a conviction, the Court may award compensation to the victim. However, tracking down fraudsters, especially those based overseas, can be challenging, and they may not have sufficient assets to pay compensation.
Many victims don't realise that banks, where payments to scammers are made, are obligated to exercise due diligence in managing their customers' accounts. This includes implementing stringent security and data protection measures, as well as procedures to identify and respond to 'red flags.' These red flags could be vulnerable customers, frequent and large-value transfers, or other transactions that are unusual or deviate from a customer's normal activity.
In cases where there's a disagreement between a bank and a customer who has been scammed, the customer can lodge a complaint with the Financial Ombudsman Service (FOS). The FOS will review the specifics of the fraud and how the bank handled it. In their assessment, FOS considers the bank's greater awareness of fraud types compared to the average customer. Therefore, banks are expected to take protective measures like halting suspicious transfers, freezing accounts, or working in collaboration with other banks to safeguard their customers.
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