Different types of financial fraud and how to stay safe

At Modulr, keeping our customers safe from fraud remains our top priority.  

As part of our involvement with initiative such as Take Five to Stop Fraud, we’ve outlined the common types of Authorised Push Payment (APP) fraud, helping you, your business and employees, and your customers stay educated and protected from financial fraud. 

Read more about the industry initiatives Modulr are supporting to enable better fraud detection and prevention here. 

To contact Modulr if you’ve been a victim of fraud, please call our 24/7 support team on 159 (or dial +44 (0) 303 313 0060), alternatively complete this form.

What is Authorised Push Payment (APP) fraud? 

APP fraud occurs when criminals deceive individuals into sending money from their account into an account controlled by the criminal. The latest figures show that £239.3 million was lost to APP scams in the first half of 2023 [UK Finance]. In response, the Payment Systems Regulator (PSR) is introducing customer protection measures against APP fraud starting from 07 October 2024. There will now be a maximum reimbursement level of £415,000 per claim for consumers who fall victim to this type of fraud. 

Common Types of APP FraudLearn about how you can remain vigilant and secure against the latest scams.  

Purchase Scams 

Purchase scams involve paying in advance for goods that are never received. Criminals often create fake websites and documents that appear genuine to trick victims. Purchase scams include, paying for items on an online marketplace that do not exist or booking a service like a hotel from a website but finding the reservation email was fake.  In 2023, UK consumers lost a record £85.9 million to purchase scams, accounting for 67% of all APP fraud cases.

These scams typically occur through social media, online auctions, or e-commerce sites. Often the buyer is convinced to pay via a bank transfer rather than using card payments – this means they can’t request a chargeback as easily and it is easy for the criminal to quickly disappears with the money.   

How to Stay Safe: 

• Be cautious of scammers who imitate reputable brands. Verify the authenticity of deals by visiting the company’s official website directly. Avoid clicking links in advertisements and instead manually type the URL into your browser. 
• Prior to making a payment, investigate the site or seller and be on the lookout for fake or negative reviews. 
• Be wary if someone requests an unexpected payment method. For instance, if you typically pay by card or digital wallet, but are asked to pay via bank transfer, it could be a red flag. 
• When purchasing items through social media, inspect the item in person to confirm its existence, particularly for high-value items.
   

Impersonation Scams 

Impersonation scams occur when fraudsters pose as someone you know and trust, convincing you to make a payment or provide financial details. Gen Z are particularly vulnerable to impersonation scams, with almost half of 18-24-year-olds targeted and over half sharing personal information [Take Five]. 

How to Stay Safe: 

• Only share personal or financial information with trusted services. Contact banks or organisations directly using known contact details. 
• Banks or police will never ask to transfer money to a "safe" account. 
• Never give remote access to your computer following cold calls or unsolicited communications. 
• Always verify that you are talking with the person, either with a phone or video call. 
• Remember scammers can add false urgency to attempt to get victims to lower their guard.
• Report suspicious emails to [report@phishing.gov.uk] and scam texts to 7726. If a scam text claims to be from your bank, then you should also report it directly to them. 
• HMRC and other government agencies will never call threatening arrest. They will also never notify you about tax refunds, penalties or ask for your personal or financial information through unsolicited emails, texts or calls. Report such emails to phishing@hmrc.gov.uk and texts to 60599 or visit gov.uk.  

For more information on how to stay safe from other impersonation scams please read: UK Finance 2023 Half Year Fraud Report.  

Advance Fee Scams 

Advance fee scams involve being convinced to pay an upfront fee for high-value goods or loans that never materialise. These scams were the second most common form of APP fraud in the first half of 2023, with £15.1 million lost. 

How to Stay Safe: 

• Question unexpected claims of money owed for unordered goods or services, especially if you are being asked to pay any fees upfront.  
• Be sceptical of winning lotteries or competitions that require upfront fees. 
• Verify the authenticity of recruiters or employers through email addresses and Companies House registration. Legitimate businesses would be very unlikely to use i.e. Yahoo, Hotmail or Gmail.  
• Be cautious of fake profiles on social media offering non-existent jobs, for example LinkedIn offering jobs that don’t exist. 
• Use reputable recruitment companies that are members of trade associations like REC, APSCo, and TEAM. 
• If you are suspicious about a potential job scam, report it to a trade association and to Jobsaware using their online reporting tool. 

Romance Scams 

Romance scams involve being tricked into sending money to someone who has adopted a fake online identity to form a relationship. In the first half of 2023, £18.5 million was lost to romance scams, a 26% increase from the same period in 2022. 

Romance scams are particularly cruel and can last for a long time while a scammer attempts to gain a closeness with their victim. It can be hard for someone who is the victim of a romance scam to recognise it.

How to Stay Safe: 

• Avoid sending money to someone you’ve never met in person.  
• Research the person you’re talking to by checking profile photos for authenticity. You can do this by uploading a picture of the person into search engines to check that their photos are not associated with another name. 
• Be alert to spelling and grammar mistakes and inconsistencies in stories. 
• Stay on the dating site or messaging service until confident in the person's identity. 
• Video calls, or active social media presence and professional profiles (e.g. Linkedin) are good indicators that a person exists. However, always be vigilant as some Romance scams can be very sophisticated.
• Be aware of excuses, sad stories and unexpected circumstances. These can all be utilised with the intent of drawing financial support from a victim.

Investment Scams 

Investment scams involve persuading individuals to transfer substantial sums of money, expecting high returns, only to lose their investments. These scams account for nearly a quarter of all APP fraud losses, amounting to £57.2 million in the first half of 2023. 

How to Stay Safe: 

• Always seek professional advice before committing to any investment decisions. If you feel pressured or if the caller is insistent, don’t hesitate to end the conversation by hanging up.
• If you receive persistent calls pushing investment opportunities, don't let yourself be rushed or pressured.
• Exercise caution when dealing with companies based abroad, as they might be trying to circumvent crucial regulatory requirements.
• Avoid purchasing from newspaper ads or marketing leaflets unless you can verify their legitimacy. Be wary of celebrity endorsements, as they can be fabricated.
• Make sure the investment broker or advisor is registered with the FCA.
• Check the names of any individuals associated with the firm, a quick search can find news articles pointing at any criminal activity or associations.
• Make sure you understand what you are investing in. Criminals rely on naivety.
• Remember, if an investment return looks to be too good to be true, it probably is.

If you think you’ve been a victim of fraud, contact your bank immediately. The quicker fraud is reported the better. 

To contact Modulr if you’ve been a victim of fraud, please call our 24/7 support team on 159 (or dial +44 (0) 303 313 0060), alternatively complete this form.

Helpful links:

Action Fraud: www.actionfraud.police.uk/

Citizens Advice: www.citizensadvice.org.uk/consumer/scams/get-help-with-online-scams/

Victims Support: www.victimsupport.org.uk/crime-info/types-crime/fraud/