Fraud victims with mental health issues are less likely to get their money back in full and twice as likely to struggle to pay bills or need to borrow money as a result of their experience, Which? research reveals.
We 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.
The findings reveal that fraud has a lasting impact on victims’ mental health and disproportionately affects vulnerable people.
Which? is calling on the Payments Systems Regulator (PSR) not to risk inflicting further psychological harm by slashing fraud reimbursement limits.
Vulnerable fraud victims hit hardest
Financial firms should take action to identify and safeguard vulnerable customers. It’s worrying then 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%) and more likely to struggle to pay their bills (21% versus 12%) or borrow money (26% vs 13%) afterwards.
Those with existing mental health issues were also twice as likely to say they didn’t tell their banks about the fraud because they previously had a bad experience doing so (11% versus 5%). And they didn’t report to Action Fraud because they felt too embarrassed (17% versus 9%) or too overwhelmed (15% versus 7%).
These figures echo our previous findings when we surveyed victims in 2022 and found that fraud victims experiencing mental health problems were twice as likely to fall into debt.
- Find out more: how to get your money back after a scam
The lasting emotional toll of fraud
Even when financial losses are relatively small – 50% of those we surveyed lost £200 or less and only 6% lost more than £5,000 – mental health often suffers in the aftermath of fraud.
Indeed, more victims reported that their experiences had a negative impact on their levels of stress (71%) and mental health (60%) than their financial situation (50%).
Many survey 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. Victims were more likely than the overall population to report regularly: getting little pleasure or interest in doing things (20% vs 18%), feeling down or depressed (21% vs 19%), having trouble falling or staying asleep (28% vs 24%) and feeling tired or having little energy (29% vs 27%).
- Find out more: where to find emotional support after being scammed
Many fraud victims don’t report their experience
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 we surveyed (63%) informed their banks, but only a small proportion reported their experience to Action Fraud (19%) or the police (16%). And 10% said they didn’t notify any relevant authorities – with men more likely to say this than women.
When we asked victims why they didn’t 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%). Some 26% weren’t even aware they could report it to Action Fraud or didn’t know how to do this (24%), despite it being the national reporting centre for fraud and cybercrime in England, Northern Ireland and Wales.
Even when fraud victims do attempt to share their experiences, they face barriers. In our survey, they were most likely to struggle reporting to receiving banks (46%) – those that have let criminals open new accounts or control accounts belonging to existing customers.
Fraud reports are also spread thinly across many organisations, most of which don’t share intelligence with each other, so crooks can hop from one to another.
- Find out more: how to report a scam
Fraud protections set to be watered down
Our 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, which will take effect on 7 October, all payment firms will be incentivised to improve anti-fraud security measures. Sending and receiving banks will split the costs of reimbursing victims of authorised push payment (APP) scams.
However, the regulator recently announced a consultation on proposals to slash the maximum reimbursement from £415,000 to £85,000, following months of pressure from parts of the payments industry and government ministers.
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 (also known as ‘Friday afternoon fraud’).
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.’
- Find out more: the scam that wipes out your house deposit in seconds
About our research: In April 2024, we surveyed 1,012 people who had lost money to fraud in the past two years. We also conducted a nationally representative survey of 2,003 UK adults.
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