As International Fraud Awareness Week unfolds, the PSR sheds light on the psychological and economic strain APP fraud exerts on UK consumers.
With a staggering £213m lost to APP fraud in just the first six months of the year, the urgency to bolster fraud prevention across various sectors becomes more pronounced.
Surveying over 1,500 UK adults, the PSR has unearthed some concerning trends: low-value purchase scams under £200 are most prevalent, with nearly 20% of fraud victims experiencing anxiety or depression post-incident. Furthermore, half of the respondents reported a significant reduction in trust towards others, and 32% expressed a waning confidence in adopting new payment technologies.
PSR Head of Policy Kate Fitzgerald emphasises the profound effect of APP fraud on consumer trust and mental health, “This research emphasises the devastating impacts of fraud on consumers’ mental wellbeing and trust. APP fraud isn’t just a financial setback, it affects people’s confidence in payments and can leave them fearful of using digital platforms and retailers in the future.
“This International Fraud Awareness Week, as we approach big shopping events like Black Friday, it’s crucial for consumers to stay vigilant – but not fearful. That’s why our new protections are so important – now, consumers can feel reassured that if they fall victim to APP fraud despite taking the right precautions, they will be able to get their money back.”
The data highlights a crucial paradigm shift—41% of fraud victims have lost faith in social media platforms, nearly fourfold those who distrust traditional banks. This underscores the broader responsibility required of online marketplaces and social media firms to curb fraud.
Interestingly, while 67% of victims prioritize reimbursement, this research dispels the myth that it leads to complacency. Reimbursed victims tend to remain vigilant, possibly even more so, reflecting the complex interplay between compensation and consumer behaviour in fraud scenarios.
With the enforcement of new regulations on 7 October 2024, mandating consistent reimbursement for APP fraud victims, payment firms are now more incentivized to prioritize fraud prevention. The collaborative financial burden between sending and receiving firms encourages better intelligence sharing to mitigate high-risk payments.
Moreover, the PSR is enhancing transparency through annual fraud performance data and is pushing for the widespread implementation of anti-fraud tools like the Confirmation of Payee, which now encompasses over 99% of UK payments. This initiative not only aims to thwart APP scams but also to prevent misdirected payments, safeguarding consumer interests at multiple levels.
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