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APP investment scams on the rise – FraudSMART

New figures show a sharp rise in fraud linked to online and mobile banking transfers in the first half of 2023.

The figures from FraudSMART, an initiative led by Banking & Payments Federation Ireland (BPFI), show a 25.6% jump in authorised-push-payment (APP) fraud compared with a year earlier.

APP fraud happens where a fraudster tricks a person or business into sending money directly from their bank account to an account which the criminal controls.

As well as including investment scams such as fake bonds, they can also include romance, holiday, or accommodation scams.

Over-55s targeted

FraudSMART says that investment scams are currently one of the most prevalent types of APP fraud, with a spike in what the organisation describes as “highly sophisticated variants” of these types of scams.

Niamh Davenport (head of financial crime, BPFI) warned consumers to be “extra vigilant” for such investment scams, which are often targeted at those aged over 55.

“This follows a notable spike seen by our members in more highly convincing types of these scams, which are now using the names and branding of well-recognised banks and investment firms to draw in their victims,” she stated.

Websites appear legitimate

Davenport said that, in many investment scams, fraudsters were hiding behind websites – including product or investment comparison websites – that appeared to be legitimate. Once consumers had submitted details, they often followed up with a call, or emailed what looked like a high-end brochure.

“Once the victim has authorised the payment and the money has reached the criminal’s account, the criminal will quickly transfer the money onwards to numerous other accounts, often abroad, where it is then cashed out,” explained Davenport.

FraudSMART has set out a checklist to avoid such scams:

• Stop and think: does this opportunity sound too good to be true? If so, it probably is,
• Take your time: there are very few legitimate investment opportunities that require you to hand over or transfer money immediately,
• Research thoroughly: check the individual and firm for qualifications, credentials, reputation and history (the Central Bank Consumer Hub is a good place to start), and
• Verify the Information: check all information with a trusted third party such as a legal or financial professional, and consult family and close friends.