Which? report: The psychology of Authorised Push Payment Fraud victims

The survey of 20 scam victims of varying ages and scam values found that victims were more vulnerable to fraud when they were targeted at a time of emotional stress or pressure, or when they were already distracted.

These existing stressors put many of the individuals surveyed ‘beyond their emotional window of tolerance’, making them more susceptible to the scammers’ tactics and unable to perform the usual checks they would have under normal circumstances.

Scammers often capitalise on these distractions by creating a sense of urgency:

• ‘This is a limited-time offer.’
• ‘I need the money for urgent medical treatment.’
• ‘Your accounts are under threat.’

This results in the victim quickly paying or transferring money and not considering the ‘red flags’ until things have calmed down and they are in a less heightened emotional state, by which time the money has gone.

Which? also found that scammers used victims’ existing psychological biases to manipulate them into sending money or purchasing a fraudulent item. In some cases, the scammers reassured victims by claiming that they shared similar experiences or interests. This involves establishing a connection and building rapport with the victim, convincing them that the scammer is not a threat.

Of the 20 individuals surveyed, covering a variety of ages, backgrounds, and scam stories, once they’d been scammed, many did not understand if or how they could get their money back or what practical steps to take.

Authorised Push Payment (APP) fraud refers to scams where people are convinced by scammers to send money via instantaneous, faster payment bank transactions, using social engineering techniques, often involving impersonation and manipulation.

This type of fraud can take many forms:

• Romance scams: where the victim believes they are in an emotional relationship with the scammer and sends them money for ‘emergencies’ such as flights, medical bills, and family tragedies.
• Investment scams: where the victim is encouraged to transfer money for investments or to top up their pension pots and retirement income, often with the promise of ‘low risk, high return’.
• Purchase scams: where the victim believes they are purchasing a genuine product which never materialises.

At present, when someone realises that they have fallen victim to an APP scam, they can report the scam to the bank and the police. In the UK, a number of banks are signatories of the voluntary Contingent Reimbursement Model (CRM) code under which they agree to reimburse APP scam victims, provided they fall within the parameters of the code.

However, as Which? outlines in its report, ‘the banks are judge and jury’ when it comes to implementing the code, so there is a lack of broader oversight or regulation which may lead to the customer being denied compensation and the blame being put back on their shoulders.

Which? is arguing for more standardisation of the APP scam refund process from banks that takes into account the many forms of emotional manipulation and coercion that victims face leaving them open to fraud.

APP fraud victims who have been refused compensation by their banks, whether signatories to the CRM code or not, can appeal to the Financial Ombudsman Service (FOS) for an independent investigation into their claim. The FOS is the independent, Government-backed body responsible for settling disputes between consumers and financial institutions, such as banks.

In recent years, the FOS has upheld an increasing number of claims made against banks by victims of Authorised Push Payment fraud, in many cases, the decision comes as a result of a lack of due diligence by the banks to prevent fraud from happening in the first place.

Sarah Spruce, Head of the APP fraud team at TLW Solicitors comments:

“These types of push payment scams are rarely the fault of the victim; scammers are using increasingly sophisticated manipulation and impersonation tactics to get around whatever protections banks might have set up to prevent fraud.

While we agree with the Which? recommendations that there should be a wide-spread approach to stopping scams at the source – namely the bank – the regulations are just not in place yet to protect consumers across the board and consumers should be aware of their options.

The report provides a revealing insight into the psychology behind how people become victims of these scams. It is easy to see how victims think ‘I’d never let this happen to me’, when actually given a certain set of circumstances, it is entirely possible. The report also reinforces the need for us all to remain vigilant and look out for vulnerable friends and family, such as the elderly, lonely, bereaved or financially naïve, such as young adults.”