Fraud has a lasting impact on victims’ mental health, Which? warns

Fraud has a lasting impact on victims’ mental health, new Which? research reveals, as the consumer champion calls on the payments regulator not to risk inflicting further psychological harm on those targeted by scammers with proposals to slash reimbursement limits by £330,000. 

Ahead of the Payment System Regulator’s (PSR) new reimbursement rules coming into effect next month, Which? surveyed more than 1,000 UK adults who had lost money to fraud in the past two years to find out how they had been financially and emotionally affected by the experience. 

Of those who reported the fraud, more than half (55%) of respondents were able to get all their money back, just over one in seven (13%) got some but not all of their money back and a fifth (22%) did not get any money back.

More victims reported that their experience had a negative impact on their levels of stress (71%) and mental health (60%) than their financial situation (50%). Many respondents spoke of their subsequent trust issues or said that they still feel angry, both at the fraudsters and themselves. One said they “learned a painful lesson and now trust very few people” and another said the deception made them feel “stupid and ashamed, so it was hard to tell anyone”. 

These negative feelings can linger long after the experience. Fraud victims in Which?’s survey reported higher levels of the following than the overall population: little pleasure or interest in doing things (20% versus 18%), feeling down or depressed (21% versus 19%), having trouble falling or staying asleep (28% versus 24%) and feeling tired or having little energy (29% versus 27%).

The emotional stress of fraud can also lead to under-reporting of fraud - making it difficult for authorities to estimate the true scale of the problem and for victims to get their money back. Most victims (63%) informed their banks, but only a small proportion reported their experience to Action Fraud (19%) or the police (16%). One in 10 (10%) said they did not notify any relevant authorities - with men more likely to say this than women.

When the consumer champion asked victims why they did not report the fraud to their banks, they typically said that they felt the amount was too small (15%), they were too embarrassed (14%), or they felt too overwhelmed (13%).

Worryingly, Which?’s research also found that victims who had been professionally diagnosed with a mental health problem at the time of the fraud were less likely to get all their money back than those with no diagnosis (45% versus 60%). 

Those with existing mental health issues were also twice as likely to say they did not tell their banks about the fraud because they previously had a bad experience doing so compared to those with no diagnosis (11% versus 5%). 

The findings show why mandatory reimbursement for victims of increasingly sophisticated scams is so desperately needed. Under the Payment System Regulator’s new mandatory reimbursement rules - due to take into effect from 7 October - all payment firms should be incentivised to improve anti-fraud security measures, with sending and receiving banks splitting the costs of reimbursing victims. 

However, the regulator recently announced a consultation on proposals to slash the maximum reimbursement by £330,000 - from £415,000 to £85,000. The PSR’s own draft cost benefit analysis found cutting the limit by this amount could increase psychological harm to scam victims and reduce incentives for banks and payment providers to prevent fraud.

Despite this, the regulator has proposed cutting the reimbursement limit, following months of pressure from parts of industry and government ministers to produce a decision more favourable to payment firms that refuse to take fraud seriously.

Which? is urging the regulator to stick to its original plan for a £415,000 limit to protect victims of high-value scams such as investment scams and conveyancing scams.

The government's failure to fully back the reimbursement scheme with the £415,000 reimbursement limit gives the consumer champion cause for concern that it is not serious about prioritising fraud, which has become the UK’s most common crime. The government must support the introduction of the original mandatory reimbursement scheme proposed by the PSR, in full and on time, ensuring victims get the support and compensation they deserve.

To tackle fraud in the longer term, the government should lead a more coordinated approach by encouraging businesses across the tech, banking and telecoms sectors to share data and stop scams spreading. Government must make fighting fraud a national priority given the devastating impact that this has on UK consumers as well as on economic growth by taking money from productive firms, reducing overall levels of investment and damaging consumer confidence.

Rocio Concha, Which? Director of Policy and Advocacy, said: 

“Our research lays bare the long-lasting emotional impact fraud can have for victims and shows why mandatory reimbursement rules are desperately needed to help ease the unfair emotional and financial burden on those who fall victim to increasingly sophisticated scams. 

“It’s outrageous that the PSR has caved in to pressure from payment firms and ministers and slashed the reimbursement limit - even though its own research found that doing so will inflict even greater psychological harm on victims and reduce incentives for financial firms to prevent fraud.

“If the government is serious about tackling fraud, it must support the regulator in maintaining the £415,000 reimbursement limit and ensuring the new system of mandatory reimbursement takes effect as planned on 7 October."

-ENDS-

Notes to editors 

Link to PSR’s draft cost benefit analysis here. 

Research

Which? surveyed 1,012 adults in the UK who lost money to fraud in the previous two years. Fieldwork was carried out online by Focaldata between 4 and 15 April 2024. The data has been weighted using data from the latest Office for National Statistics (ONS) Crime survey. 

From 12th - 15th April 2024, an online Omnibus carried out by Deltapoll on behalf of Which? also conducted a nationally representative survey of 2,003 UK adults.

About Which?

Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.

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