/ Money

Banks cannot delay tackling fraud: my letter to Stephen Jones

With £434 per minute lost to authorised push payment (APP) scams, I’ve written to UK Finance CEO, Stephen Jones, to outline our critical steps required to halt their growth.

Dear Mr Jones,

Which?’s 2016 super-complaint called for urgent intervention to better protect consumers from bank transfer scams. The APP Scams Code of Conduct is a positive step forward, and Which? is keen to see it successfully implemented by banks following its launch next week.

Whether people are conned out of a few hundred, or many thousands of pounds, the impact of scams can be devastating.

Scammers are using increasingly sophisticated tactics that are harder to spot, and every day innocent victims continue to lose life changing sums of money through no fault of their own.

Your recent figures show that £434 every minute is lost to scams in the UK, equivalent to £625,000 every day. It remains clear that your members are best placed to identify and take measures to reduce the risk of fraud.

Through the APP Scams Steering Group, Which? has argued that an overall reduction in scams and the swift reimbursement of all victims who lose money through no fault of their own are both critical measures of the Code’s overall success.

Critical steps required for success

In addition, however, we believe that the actions set out below are also critical steps required to successfully halt the growth of APP scams:

– Banks must promise to protect their customers by signing up to the Voluntary Code as it launches on 28 May 2019, and the PSR must commit to conducting a one year review of its implementation

– Banks must implement Confirmation of Payee, which can cut scams in half, no later than its proposed new deadline of March 2020

– No blameless scam victim should ever be denied reimbursement again, and full refunds should be issued swiftly

– Banks must show they are serious about protecting consumers and immdediately publish their joint timetable to agree a long-term funding solution for no blame refunds

– Individual banks must publish scam victim and reimbursement figures of a regular basis

Banks can provide greater protections

Responsibility should be allocated to those best placed to manage the risk of fraudsters using bank accounts and payment systems to facilitate their scam.

TSB’s recent announcement to offer a full Fraud Refund Guarantee demonstrates that banks can act to provide much greater protections to their customers than will be offered through the Voluntary Code.

Given this, we urge all UK Finance members to implement the Code immediately and to begin offering significantly more comprehensive protection to their customers in-line with TSB’s Fraud Refund Guarantee.

Until these steps are taken, the devastating impact of bank transfer scams will continue to cause growing financial and emotional harm to UK consumers.

Yours sincerely,

Anabel Hoult, Which? Chief Executive.

Comments

Millions potentially still vulnerable to devastating bank transfer scams, warns Which?
8 August 2019
https://press.which.co.uk/whichpressreleases/millions-potentially-still-vulnerable-to-devastating-bank-transfer-scams-warns-which/

”Almost half of the UK’s major banks and building societies still haven’t signed up to vital new fraud protections
And goes on
”Signatories to the code account for over 85 percent of authorised push payments, which make up the vast majority of the 218.5 million faster payments that were made last month.

So, is it more informative to refer to “half the banks have not signed up”, or “85% of customers are protected.
It’s how you tell ‘em.

I wonder if those banks that haven’t signed up might be wondering why, if they have no negligent part in a successful scam, they – actually their customers – should automatically pay back another customer? We will all pay in the end through increased charges or decreased returns of course.
We’ve already seen how such an approach has resulted in everyone with an overdraft being penalised. Those who were responsible enough to ask their bank if they can have an overdraft are now paying twice the fees than before, because those who didn’t ask cannot now be treated differently. So much for personal responsibility

In the Telegraph on line 23 Aug:
“Blameless fraud victims could be denied refunds after January because banks cannot agree how to fund compensation payments.

Under a voluntary code introduced in May, victims are reimbursed if the bank was at fault. The code also established that customers who took reasonable steps to protect themselves would be repaid, even if the bank had done nothing wrong. However, banks agreed to fund payments in this “no-blame scenario” only until January.

A levy of around 2.5p on bank transfers to pay for these refunds, proposed by UK Finance, the banking trade body, is being considered but the Telegraph understands there is little chance that it will be accepted.

A fraud start with an action, however unwitting, by the victim, so they are a party to the loss of their money. What I do not see is why, if the bank plays no negligent part in the loss of money, the bank should use our money (because that it where it comes from) to refund the “victim”. One problem, apart from the cost, is that it dilutes the responsibility of customers to protect themselves, knowing they’ll likely be reimbursed. Another problem is the possibility of customers setting up a collaborator to fake a fraud and receive compensation.

It will be interesting to see how the banks resolve this but, like overdrafts, it is likely to be the responsible customer who loses out.
Well, that is my gut feeling. 🙁

I agree malcolm.

The banks need to start working together on fraud and fund a joint bank fraud squad that ‘victims’ have instant access to.