Banks MUST do more to help victims of fraud

If you find yourself victim of a bank transfer scam, there’s no industry less likely to stick to the old adage that ‘the customer is always right’

Given that we rely on banks to keep our money safe, it’s reasonable to expect they would be on your side in the event a fraudster runs off with your savings. 

But if you find yourself the victim of a bank transfer scam, there’s no industry less likely to stick to the old adage that ‘the customer is always right’. Instead, the customer is – the majority of the time – wrong. 

Some banks are blaming customers for the consequences of this crime in a startlingly high proportion of decisions, including two firms that have held scam victims fully responsible for their losses on more than nine in ten occasions. 

Breaking the chain: Some banks are blaming customers for the consequences in a startlingly high proportion of decisions

This is despite these banks being signed up to an industry code designed to ensure that victims of bank transfer scams are reimbursed for their losses when they are not at fault. 

Reimbursement rates are too low and Which? believes this is because firms are acting unfairly by regularly pointing the finger of blame at customers – even though many of the crimes are highly sophisticated. 

This means that for many, the shock and dismay of realising they have been scammed is just the start of their ordeal. They find that when they go to their bank for help – perhaps a firm they have banked with for decades – they are the ones given a grilling and made to feel like they are to blame for their misfortune. 

Scammers often come armed with a wealth of stolen personal information, sometimes including a record of recent bank transactions. They can insert themselves into a legitimate chain of text messages from their victim’s bank or impersonate a solicitor at exactly the time the victim is expecting to transfer the deposit for their new house. They pay to place enticing and convincing adverts for fake or dodgy products on search engines and social media platforms we use every day. 

Banks know all this, but they then dismiss it, arguing that customers should always do more to check that the payment they are making is to a legitimate company. All the evidence suggests that some of the same banks that helped create the industry code are now choosing to wrongly interpret it. 

As cases investigated by the Financial Ombudsman Service and Which? show, the arguments put forward by banks are often deeply flawed and lacking in evidence – and lead to unfair and inconsistent decisions. The body responsible for monitoring the code has found that fraud warnings put in place by the banks are often inadequate, and the Financial Ombudsman Service frequently upholds decisions on this type of crime in the customer’s favour. 

As a result, just £147million of losses totalling £311.8million were reimbursed last year, a level which the payments regulator says is too low. To make matters worse, consumers don’t know which firms are wriggling out of their responsibilities by blaming their customers – and which are treating their customers with more understanding. This is because banks signed up to the code are not required to publish the figures that will show how each of them is dealing with the problem. 

Major improvements are needed urgently. 

We need a mandatory set of protections that all banks and payment providers must adhere to, and tough enforcement measures for firms that don’t follow the rules that will ensure more victims get their money back. 

Banks must be ordered to publish regular data on their prevention and reimbursement rates. Let the customer decide if they want to have their account with a bank that won’t be there for them should the worst happen. 

These changes can’t afford to wait. With every day of delay, criminals are making off with millions of bank customers’ pounds. 

The result? More lives destroyed as lifetimes of hard work and careful saving vanish at the panicked click of a button.