What is APP fraud and what measures are in place to prevent it?

What is APP (Authorised Push Payment) fraud?

APP Fraud is where individuals are victims of a scam due to fraudsters tricking them into sending money. Some examples (although not limited to) are as follows:

• Impersonation scams where fraudsters pretend to be from your bank, a company you may have had interactions with in the past or the police.
• Business Email Compromise scammers impersonate a company executive or supplier, sending an email that appears legitimate, instructing an employee to make a payment to a fraudulent account.
• Purchase scams that trick you into paying for goods or services that are not brought to the point of completion.
• Triangle scams where you may be asked to make a purchase for someone else, beware. This might be a triangle scam, where a scammer uses stolen payment info to buy goods and has you forward them. Secure your data, report the scam — and don’t make any transactions.
• Investment scams is when criminals convince victims to ‘invest’ with promises of high or guaranteed returns. In 2023, investment scams comprised a quarter of all APP fraud losses, totalling £107.8 million.

Who is eligible for fraud reimbursement under the new rules?

The reimbursement requirement applies to individuals, micro-enterprises, and small charities, where an APP scam payment is made using Faster Payments or CHAPS in the UK and sent to a relevant account in the UK. To be eligible, you need to raise a claim as soon as you realise it’s a scam, but no later than 13 months of the final payment made to a fraudster as part of the same scam.

The rules require you to take caution when making payments — this is known as the Consumer Standard of Caution. Under the Consumer Standard of Caution, you should always remember to:

• Report the fraud to Freemarket as soon as it happens.
• Share all information necessary when reporting your claim to help the investigation.
• Report the fraud to the police, or consent to Freemarket reporting on your behalf.
• Have regard to specific, directed interventions made either by Freemarket, or by a competent national authority e.g. you should take note of any warnings made by Freemarket before you proceed with a payment.

Furthermore, as per clause 14.2 of the Freemarket terms and conditions, APP scams only apply to individuals, small charities and micro-enterprises and do not apply to companies deemed as corporates. Please ensure you are aware of the Terms and Conditions that have been agreed upon.

Every claim will be reviewed individually based on the information you provide as well as any information available from the receiving Payment Service Provider or the police.

How long will it take?

Any eligible APP claim must be reimbursed back within five business days of the victim reporting the scam. It may take longer under certain circumstances if we pause the five-business day reimbursement timescale. This can be done when Freemarket are liaising with yourselves and counterparties to ascertain the nature of the fraud and collect any relevant supporting documents. The timescale for deciding whether to reimburse is then moved to a maximum of 35 business days.

How much can be reimbursed?

The maximum reimbursement amount per claim is £85,000.

What measures have we taken to prevent APP Fraud? 

Freemarket utilises best in class fraud detection measures and transaction monitoring to ensure we are playing our part in protecting you from fraud. Additionally, as per section 31 of your terms and conditions, Freemarket have implemented Confirmation of Payee to ensure better protection. Confirmation of Payee is an account name checking service designed to help reduce misdirected payments, and provides greater assurance that payments are being sent and collected from the intended account holder for UK domestic payments.

What can I do to avoid becoming a victim of APP Fraud?

To avoid becoming a victim of APP fraud, here are some effective measures you can take:

1. Verify Requests: Always double-check the identity of anyone requesting a payment. If you receive a request via email or phone, contact the person or company directly using official contact details,
2. Don’t rush: Scammers often create a sense of urgency. Take your time to think through the request and do not feel pressured to act immediately,
3. Be wary of unsolicited communications: If you receive unexpected messages or calls, especially those asking for personal information or payments, be cautious. Scammers often use tactics like impersonation,
4. Educate yourself: Stay informed about the latest scams and tactics used by fraudsters. Awareness is key to prevention. Keep up to date with Take Five for further advice,
5. Report suspicious activity: If you suspect you’ve been targeted or have fallen victim to a scam, report it to your local bank and local authorities immediately.

For more information on keeping safe online, please see our help article here.

Will I always be reimbursed?

You won’t get your money back if you’re found to have been complicit in the fraud or grossly negligent (i.e. ignoring clear warnings) or if you’re not an individual, micro-enterprise or small charity. Please note, this exception does not apply to vulnerable consumers.