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The top 3 types of fraud and what victims can do

  • Describe the different types of financial fraud
  • Identify the means of tackling this
  • Explain some of the warning signs to look out for
CPD
Approx.30min
The top 3 types of fraud and what victims can do

I have been compiling quarterly round ups of fraud-related cases since 2016. 

One of the insights this gives me is an idea of trends in the types of fraud that end up before the Courts of England and Wales.

In addition to this, my business is often contacted by victims of fraud seeking redress, which provides a closer understanding of what fraudsters are up to and the impact of those actions. In my experience these can be split into three general types:

  • The confidence trick.
  • The diversion of funds.
  • The too-good-to-be-true opportunity.

The confidence trick

Starting with what is often a fairly low level but deeply pernicious type of fraud: the modern day confidence trick. This could be a text message from a seemingly official source saying you have had close contact with someone with Covid, which then asks for payment for the necessary tests to be sent.

Or it could be a WhatsApp message from your ‘child’ telling you they have changed their mobile phone and been frozen out of their bank account after trying to link their accounts to the new device. Shortly afterwards there is a request for help with payment of a bill that is overdue. 

 

 

 

 

Romance fraud is another growing scam where fraudsters prey on the unsuspecting.

Often relatively low levels of payments are involved, then once one payment is made further requests are likely to be received, leaving the victim not only out of pocket but in some cases also heartbroken.

The diversion of funds

Authorised push payment (APP) fraud is so called because it involves the victim authorising a payment to be made out of their account (a pushed payment rather than a payment requested by the recipient such as a standing order). This often involves the provision of a false invoice, the hijack of emails or altered bank details with the aim of intercepting a genuine, anticipated payment and diverting the funds to the fraudster’s account and can catch out large companies and individuals alike.

This leaves the victim with the double-whammy of having sent money to a fraudster and being left with an unpaid (and due) invoice or completion sum.

While the confirmation of payee account name checking service introduced in June 2020 assists with this by flagging discrepancies between the name of the intended payee and the name on the bank account funds are being transferred to, it does not work in all cases. Remarkably not all banks have adopted the service, and it is not currently possible to undertake the checks on a transfer to an account held out of the country.

While there is a contingent reimbursement model (CRM) code, which is intended to protect customers by detecting and responding to APP scams, and to ensure that victims of APP fraud have access to compensation, the code is voluntary and, again, not all banks have adopted it.