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How does your bank tackle fraud?

Each week seems to bring with it a new scam and with more than half of all UK adults banking online, fraudsters are having a field day. So how supportive is your bank when you’ve been a victim of fraud?

Online banking fraud losses soared to £60.4m last year – a 48% increase on 2013 – while total card fraud losses were up 6% to £479m, says Financial Fraud Action UK.

Conmen are always finding ways to adapt. They can spoof your bank’s phone number, send convincing phishing emails (such as this recent HMRC tax rebate scam), or call up pretending to be your bank so that you give away banking login details or other sensitive information.

It’s enough to make you feel downright paranoid.

Bank fraud – getting your money back

Banks, building societies and credit card providers say they work hard to prevent and detect fraud, but victims don’t always get their money back.

If you unwittingly authorise a payment because of a phone ‘vishing’ scam or email ‘phishing’ scam the bank’s liability is limited because you have inadvertently given your own money away.

Older people are particularly vulnerable – the Financial Ombudsman Service (FOS) recently reviewed 185 phone scam cases and found that 80% of victims were aged over 55, with some losing over £100,000.

Card fraud victims generally have much more protection because the bank can only refuse to refund you if they can prove you were ‘grossly negligent’. Firms don’t always get this right – the FOS says that it often has to remind businesses of the rules about their liability for disputed transactions and in particular the differences between credit cards and debit cards.

Have you been a victim of fraud?

The Financial Conduct Authority last week reported that firms are ‘making good efforts to deliver fair outcomes for consumers’ when they handle claims for unauthorised transactions (when a payment is made from your current account or credit card without your consent). But now we want to hear about your experiences of bank fraud.

Have you ever been a victim of fraud – and if so, was your provider supportive? Did you get your money back quickly – or even at all? Does your bank ever query unusual payments, or warn you about the latest scams?

Comments
Guest
Steve T says:
4 August 2015

I love that Fos have to ‘remind firms’ of their responsibility. This is exactly the problem with financial services. Despite the fact firms know exactly what their responsibilities are they too often try to get away with not meeting them until regulators ‘remind’ them, then they cry about being over regulated. If we forget to meet our legal responsibilities we usually get more than a reminder…

In a world where these firms really put their customers – rather than their bottom line – first, these losses would be covered by hedging or whatever, just as potential losses faced by banks themselves are.

Guest

If a fraudster impersonates a bank and persuades the victim to transfer money to the fraudster, then some victims are expecting their banks to compensate them for the fraud.

If a fraudster impersonates a Nigerian lawyer (419 scam) and persuades the victim to transfer money to the fraudster, then the victims don’t expect their banks to compensate them for the fraud.

Why should the approach by the banks be different according to whom the fraudster is impersonating? It shouldn’t, and the banks quite rightly refuse to compensate in both cases. Consumers need to exercise due diligence over their money and treat all unsolicited communications as suspicious. The weakness in both cases above is not the banks or banks’ systems, but the stupidity of consumers, which the fraudsters are exploiting.

Guest

@NFH, That’s a little harsh. Note I said a little. I mean how difficult is it if a grey haired old lady turns up at the bank asking to withdraw £4k cash for the cashier to simply ask. “Are you withdrawing this money as a result of an unsolicited phone call?”

Banks don’t care about fraud cos at the end of the day its the customer that pays or their insurance. And as too many people in this country seems to be far too trusting, why is it too much to expect more from banks?

Guest

William, I think that some banks do give a warning about unsolicited phone calls when setting up a new payee in online banking. But the next step will be for the fraudsters to anticipate this warning and give some plausible-sounding reason to the victim to ignore it.

The banks do care about fraud, as it impacts upon their profits. I doubt that banks have insurance for this kind of fraud. I know that credit card issuers don’t even have insurance for Section 75 claims for example, so fraud is even less likely to be covered by insurance.

When it comes to fraud that banks don’t care about, contactless cards would be one type. The cost of fraud on contactless cards is less than the merchant fees generated from card usage and the saving on stocking cash machines. Therefore the banks tolerate a small amount of fraud in exchange for increased profit and cost savings elsewhere. This is not the case with bank transfer fraud.

Guest

Thanks NFH, so do you believe victims of email or phone scams shouldn’t be entitled to refunds, no matter how sophisticated the scam? What about card fraud? Do you think banks should reimburse customers if someone steals or clones their card, for example?

Guest

I believe that banks should compensate victims only where the bank’s systems have been compromised. This would include card fraud and phishing (with one-factor authentication). Banks should not be expected to compensate victims who log into their online banking and transfer money to a fraudster at the fraudster’s request. It doesn’t make any difference whom the fraudster was impersonating. If the banks compensated in this case, then they would also have to compensate for 419 scams; this would be absurd.

Guest
Alex says:
4 August 2015

I agree, if we were to return to a day when there were no electronic payments and someone were to knock on my door and convince me to pay them a sum of cash for a bogus service, no one would find it reasonable to hold the bank responsible.
But.. if the bank has my money in it’s safe and the same bogus salesman knocks on the banks door and convinces them that I owe them money, if the bank pay it without asking me, I would certainly hold the bank responsible.

In my opinion, an electronic equivalent:
Transferring money on a 419 scam is negligent behavior and should not be compensated;
Card cloning is unavoidable as a customer and should be compensated.

Guest

Alex, that’s extremely well put. One just has to describe the same thing in an offline context and it becomes much clearer.