A new "dangerous" scam is convincing people to approve card payments that are actually going to fraudsters.
Consumer group Which? has warned that criminals are using tactics similar to authorised push payment (APP) scams, which involve people being manipulated into making a bank transfer.
Many "authorised" scams involve people sending money to fraudsters directly from their bank accounts, but Which? is concerned that fraudsters are also cashing in by convincing victims to approve card payments.
Which? described the threat as a "critical wake-up call" after years of focusing security efforts on bank transfer fraud.
How to avoid scams
It said that, while unauthorised card fraud, where spending happens without the cardholder’s authorisation or knowledge, is generally refunded, and victims of APP fraud have the protections of a reimbursement scheme, some people who are manipulated into approving card payments to scammers may face more of a hurdle to get their money back.
Lisa Webb, a consumer law expert at Which?, said: "This is a particularly dangerous scam since card payments fall outside of the automatic refunds that banks are obliged to provide for authorised push payments.
"Fraudsters typically cold-call victims while posing as bank security staff, the police or the financial regulator, claiming the account is under attack and urging them to approve card payments or share one-time codes to 'block' or 'reverse' the supposed fraud.
"Always raise a claim with your card provider and escalate to the Financial Ombudsman Service if needed, providing full details of how you were manipulated into approving the payments."
Schemes like chargeback or Section 75 may offer refunds if a card payment is made to a scam retailer or trader, but Which? warned that these mechanisms were not designed for fraud scenarios where the payment is made to a legitimate business as part of a wider scam.
The scenarios often begin with a cold call from someone posing as a bank or regulator, telling the victim that their account is under threat.
Which? warned that criminals may use similar tactics to those used in authorised push payment (APP) scams
(Image: Getty)
What to look out for in card payment scams
Scammers may already have the victim’s card details from phishing or a data breach, and will then ask them to approve payments through their banking app - claiming this will prevent fraud.
Victims may also be tricked into revealing one-time passcodes, allowing scammers to add the card to a digital wallet and make purchases.
People may be asked to move money to a “safe account” they hold with a different bank if, for example, the criminal believes that provider has weaker controls.
Which? is urging financial organisations to improve defences and release more industry data on card fraud.
A UK Finance spokesperson said: "Fraudsters use a wide range of tactics to trick people, including impersonating banks and well‑known organisations to bypass security checks such as one‑time passcodes.
"Criminals often research their targets in advance, using details harvested from scams, social media and data breaches.
"We urge everyone to stay alert and never share sensitive information – including one‑time passcodes – with anyone other than a service you were expecting to hear from.
"If you receive an unexpected call from someone claiming to be your bank, hang up and call back using the number on the back of your debit or credit card."
The Financial Ombudsman Service (FOS) also confirmed it has seen a rise in such cases.
What are your refund rights?
Patrick Hurley, ombudsman director at the Financial Ombudsman Service, said: "Being the victim of a fraud or scam can be deeply distressing, and sadly for many people the financial implications can be life-changing.
"The Financial Ombudsman Service continues to receive hundreds of cases a week from people who have been victims of fraud and scams.
"Anecdotally, we are seeing more cases where people inadvertently use their debit or credit card to pay a fraudster or are persuaded to initially move money to other accounts that are in their name.
"Those consumers may have less recourse under the rules and regulations.
"If a consumer has been a victim of a scam, they should speak to their bank first.
"If they don’t feel they’ve been treated fairly by their financial provider, they should get in contact with our free and independent service and we’ll see if we can help."
The Financial Conduct Authority (FCA) said it is aware of the issue and is discussing it with the financial industry.
They added: "We know the devastating impact that scams can have on individuals, and each case should be considered by firms on its own merits.
"People should be on alert if they’re contacted out of the blue, and particularly if they’re asked to transfer or send money. If you’re concerned, hang up.
"You can also contact us if you’re struggling to establish whether someone calling you is from a genuine financial firm."
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What to look for in scams
To find out if you're being scammed, it's worth knowing the tactics that fraudsters sometimes use.
The government's Stop Think Fraud campaign offers tips for spotting scams across a number of platforms - phishing emails, fake text messages, phone fraud, fake online adverts, fake websites, doorstep fraud and postal fraud.
When it comes to phone fraud, the government advises you to be particularly vigilant about anyone calling you who says they are from a computer or phone company, bank or tax office or the police.
You can see all the tips for becoming aware of scammers via the government website, linked above.
What are your best tips for avoiding scams? Tell us in the comments below.