‘I couldn’t sleep’: victims of UK fraud epidemic tell their story

“I couldn’t sleep. I was waking constantly thinking about it,” says Stephen of the trauma he felt after discovering he had been scammed out of £70,000 by fraudsters who tricked him into buying a fake high-interest savings bond.

“I felt stupid – as a former solicitor, I thought: what was I thinking? But at the same time it was sophisticated.”

Others have been scammed out of six-figure sums: Andrew White* lost £240,000 when he was buying a house. “I do think about it a lot,” he says. White, who was eventually refunded by his bank, adds: “I thank God that this did not occur with a reduced compensation level of just £85,000.”

Related: Why is the UK slashing the maximum banks must refund to fraud victims?

He is referring to news this week that the regulator is scaling back plans to refund UK fraud victims, cutting the maximum that banks must pay by almost 80% from the proposed £415,000.

The announcement prompted an outcry in some quarters: the consumer body Which? said victims of high-value frauds such as investment scams and those involving people transferring large sums for a house purchase “ stand to have their lives destroyed ” by the regulator’s decision to “abandon” them.

Every two minutes, someone in the UK has money stolen from them via a bank transfer scam. And that is based just on reported cases – many victims are too embarrassed or ashamed to come forward.

Living with multiple sclerosis, Stephen (who asked for his surname not to be disclosed) had to retire early due to his worsening vision and was hunting for good investments last year. “Bank base rates were on the floor and I was just looking for a return on my money,” he says. He believes he was targeted after responding to an investment email.

The criminals, who posed as bank representatives, hooked him in by dangling a one-year fixed-rate bond supposedly paying 11%. He was contacted by email and phone by several individuals purporting to work for the bank, Stephen explains, saying he felt he had done his homework.

“I was reassured because I found their names on the Financial Services Register , and the correspondence had the correct registration number, as well as the Financial Services Compensation Scheme logo.”

He went on to transfer £70,000 in three payments from his bank account. All the while, the fraudsters kept up the pretence in slick correspondence, which included issuing a worthless “digital bond certificate”.

Alarm bells rang when they tried to push him into investing more. “I had told a couple of my friends about this great opportunity I’d been offered, and when I found out that I’d been had, I had to go and speak to them and say, ‘Don’t do that. It’s a scam.’”

Unlike many other victims of Britain’s fraud epidemic, Stephen got all of his money back after the Guardian helped escalate his case.

White, an RAF veteran, nearly lost his entire retirement pot after deciding to buy a house to be closer to his family.

When the completion date was getting near, he received an email from his conveyancing firm advising him when and where to pay the deposit. He subsequently transferred the funds to the nominated bank account.

It was only when he emailed the company to confirm it had received the money that he discovered that the sum had not arrived. A scammer had hacked into the email exchanges between him and his solicitor and, messaging from the same email address, had directed him to pay the funds into a bogus account.

White was refunded after the Financial Ombudsman Service decided his bank had not sufficiently questioned the multiple payments.

He says: “The £240,000 scammed from us was not because I was not trying to make a shady get-rich-quick investment. It was for the purchase of a house to spend our retirement years in. To only get a third of that back would have ruled out being a homeowner, which we had been when we sold our house in Wales to be closer to my daughters and grandchildren.”

This scam involves people being tricked into sending money to bank accounts operated by criminals – a type of crime known as authorised push payment (APP) fraud.

Common versions of this scam have involved fraudsters hacking in to email accounts and posing as a builder carrying out work on someone’s home, or a solicitor dealing with a house purchase, or an official organisation such as HM Revenue and Customs. Sometimes, people are cold-called by fraudsters posing as someone at their bank and persuaded to move money to a “safe” account.

The scammers sometimes pretend to be selling goods, services or investments that do not exist or never arrive. In other cases, victims are tricked into believing they are in a romantic relationship and end up handing over large sums .

In 2023, there were 252,626 reported cases of APP scams totalling almost £341m, according to the latest official data . That is 692 cases a day, or almost 29 an hour.

A voluntary industry code on reimbursement has been in place for several years, but some campaigners say the banking industry’s approach to refunding victims is unfair and inconsistent.

Last year, the Payment Systems Regulator (PSR), which sets rules for the sector, announced a shake-up to ensure more victims are refunded. It unveiled new mandatory rules taking effect on 7 October this year that require banks and other payment companies to reimburse fraud victims who have been tricked into sending money to scammers. Crucially, it decided to opt for a maximum refund of £415,000 for all consumers.

But since then, banks, fintech companies and some politicians have been furiously lobbying for a much lower maximum.

Initially the PSR said £85,000 was “too low” as it would “exclude a significant number of victims”, adding: “There would be significant harm to those victims defrauded above this amount.”

It warned that a significant proportion of investment scams in particular involved sums higher than that.

This week the regulator appeared to try to play down how many people would lose out, saying that in 2023 – out of more than 250,000 cases – there were 18 instances of people being scammed for more than £415,000, and 411 instances of individuals being conned out of more than £85,000.

It was unfortunate for the PSR that its announcement came on the same day that it emerged that fraud and scam complaints have soared to their “ highest-ever level ”.

More than 8,700 fraud and scam cases were lodged with the financial ombudsman during the period 1 April to 30 June – up 43% on the same three months last year – and more than half of these were APP scams.

At the moment, under the voluntary rules, fraud victims face what campaigners claim is a “reimbursement lottery”, depending on who they bank with.

According to the latest data issued last month, Nationwide fully reimbursed 96% of the APP scam cases reported to it last year. A further 3% got some of their money back. TSB was just behind, at 95% and 3%, respectively.

However, if you are with app-based bank Monzo, then good luck: last year it fully refunded just 9% of APP fraud victims, and provided a partial refund to a further 6%. Monzo has previously said its customer base was “disproportionately affected by purchase scams”, most of which originate on social media.

A consultation on the new £85,000 cap closes on 18 September, after which the PSR will consider the responses and confirm its final approach – so a last-minute U-turn is still theoretically possible.

White hopes the regulator reconsiders “so that unfortunate victims won’t face financial ruin”.

* Name has been changed