As authorised fraud complaints increase, prevention is key to tackling fraud this Black Friday

As Black Friday approaches, RSM UK is urging financial services providers and social media platforms to gear up for a spike in fraudulent transactions, and to protect consumers from fraudsters. Data obtained by the leading audit, tax and consulting firm under a Freedom of Information Request shows complaints to the Financial Ombudsman Service (FOS) regarding authorised push-payment fraud (or APP fraud) have increased almost a quarter (23%) so far this year, and this percentage is likely to rise further over the festive period. 

APP fraud occurs when a criminal tricks an individual into sending a payment from their account, or sharing enough personal data to enable the criminal to steal money directly from their account. These can take many forms, including fake online adverts, phishing emails, romance scams and spurious investments. 

With five weeks still to go before the end of the year, the number of complaints to FOS regarding authorised fraud has already far exceeded 2023 figures, with 16,853 by mid-November, compared to 13,705 for the whole of last year. Meanwhile the number of complaints upheld by FOS appears to be declining, with just 4,212 so far this year, compared to 5,334 in 2023, a 21% decrease. 

Erin Sims, financial services senior analyst at RSM UK, says: “With Black Friday and Cyber Monday offering tempting bargains, more consumers will be shopping online, which also presents an irresistible opportunity for scammers. Over three-quarters of APP fraud cases originate online, highlighting the need for these platforms to play their part in helping to prevent consumers from falling victim to fraud.”

RSM UK’s recent survey to 2,000 consumers found over a third (37%) plan on starting their Christmas shopping in November. 

Jacqui Baker, head of retail at RSM UK, comments: "Retailers are gearing up for a crucial period as consumers increasingly plan their holiday shopping around Black Friday and Cyber Monday deals. With many consumers starting their Christmas shopping in November, the opportunity for retailers to capture early festive spend is significant. However, this also underscores the importance of ensuring a seamless and secure shopping experience to build trust and encourage repeat purchases."

According to the latest ONS crime data, fraud is now the most frequently committed crime in England and Wales, increasing 7% this year, with 3,560,000 reported incidents. The FOS data suggests currently only around one in four people who complain to them will get their money refunded. However, this could soon change, with new APP fraud reimbursement protections introduced in October making reimbursement for fraud mandatory, and splitting refunds between the payer and the receivers’ banks. It remains to be seen what impact this will have on how the FOS deals with complaints of fraud in future. 

The 2024 half-year report from UK Finance shows that in the first half of 2024 £570m was lost to scammers who committed authorised payment fraud. Financial services firms managed to stop £710m from being stolen by scammers, an increase of 13% on the previous half year report. 

The increase in complaints to the FOS likely represents just a fraction of the actual number of cases where banks have refused to reimburse money stolen by scammers. 

Erin Sims concludes: “Complaints only reach FOS when the customer failed to receive a satisfactory response to their initial complaint to their bank. Many customers don’t take matters further, either due to the perceived stigma around being scammed in this way, or because they don’t know where else to go for help. Sadly, there are probably many other people who are scammed in this way but don’t appear in any statistics, as they simply wrote off the lost money.”