People experiencing mental health problems twice as likely to fall into debt due to fraud

People experiencing mental health problems who fall victim to fraud are less likely to get their money back and twice as likely to fall into debt, Which? research has found. 

The consumer champion’s survey of more than 1,000 fraud victims revealed one in five (19%) of those with mental health conditions felt embarrassed about reporting the incident to their bank. This results in some victims staying silent, crimes not being logged and fraudsters going free. 

Which? has campaigned for the introduction of mandatory reimbursement for APP fraud and believes it may help to end the current culture of victim-blaming by encouraging more people to report incidents without embarrassment or fear of facing a grilling by their bank.

The research found six in ten (58%) victims of fraud with a diagnosed mental health problem got all or some of their money back. This is compared to two thirds (68%) of victims with no mental health condition.

One in three (31%) had to borrow money from friends or family, compared to one in five (18%) with no diagnosed mental health condition, and were twice as likely to borrow money from a bank (11% compared to only 5%).

They were almost twice as likely to not have enough money for essentials (29%) and go into debt (26%) as a result of fraud compared to victims with no mental health conditions (15% and 12% respectively). Around six in ten (63%) fraud victims said it had a harmful effect on their mental health and four in ten (39%) said it even negatively affected their physical health.

Six in ten (59%) said it negatively affected their financial situation, two-thirds (68%) said it negatively impacted their anxiety about finances and seven in ten (71%) said it negatively affected their stress levels.

Fraud victims were also more likely than the overall population to report feeling little pleasure in doing things, feeling down or depressed, having trouble falling or staying asleep and feeling tired.

The Financial Services and Markets Bill requires the Payment Systems Regulator (PSR) to introduce an obligation on banks and other payment providers to reimburse victims of bank transfer scams.  Under PSR proposals announced last month, banks will be forced to reimburse anyone who loses more than £100 to bank transfer or payment fraud, apart from in exceptional circumstances. This should mean the vast majority of victims are fully reimbursed – putting an end to the reimbursement lottery they face. 

The PSR has proposed that any fraud victims deemed to be vulnerable should be reimbursed without exception, meaning those with mental health problems should expect to receive extra support. 

Which? says the regulator must be ready to ensure that banks are treating customers fairly and consistently, and prepared to take tough enforcement action against those who breach the rules. There is also a call for the government to prioritise scam victim protection in the Online Safety Bill and ensure it returns to parliament as soon as possible. Which? has previously estimated that the cumulative cost of online fraud to wellbeing is £7.2 billion per year. 

Rocio Concha, Which? Director of Policy and Advocacy, said “Our survey shows fraud victims experiencing mental health problems are being failed, with devastating effects on their wellbeing and finances.”

“New rules to make reimbursement of bank transfer fraud mandatory can’t come soon enough. They must be backed with tough enforcement measures for any banks that flout them and fail to treat their customers fairly.”

“The government must also bring the Online Safety Bill back to parliament quickly to ensure vital protections against the flood of fraudulent adverts on the world’s biggest social media sites and search engines become law.”