/ Money, Technology

Should banks refund victims of online fraud?

Sir Bernard Hogan-Howe

The Times reports that Met Police Commissioner Sir Bernard Hogan-Howe has said victims of online fraud should no longer be refunded by banks if they fail to protect themselves.

With online fraud increasing, this is an astonishingly misjudged proposal from the Met Police Commissioner.

Sir Bernard on bank fraud

The front page of The Times reports that Sir Bernard Hogan-Howe said:

‘If you are continually rewarded for bad behaviour you will probably continue to do it but if the obverse is true you might consider changing behaviour. To be fair to the banks, if one says they’ll do it and the others don’t that’s a competitive advantage.

‘The system is not incentivising you to protect yourself. If someone said to you, “If you’ve not updated your software I will give you half back”, you would do it.’

However, the priority should be for banks to better protect their customers, rather than trying to shift blame on to the victims of fraud.

Reimburse fraud victims

Of course, it’s vital to educate consumers about how to avoid fraud, but suggesting that banks could make people more security-conscious by refusing to reimburse fraud victims risks sending the wrong signal about the banks’ own crucial role in preventing crime.

We know that scammers are using increasingly sophisticated techniques to defraud people out of their money, in many cases beyond the control of consumers.

We believe that banks should be doing more to improve their security processes and systems, share their intelligence to prevent fraudulent activity, and support their customers when they fall victim to crime.

Banks inconsistent with fraud

In September 2015, we found that banks were inconsistent when dealing with fraud. A Freedom of Information request revealed that the Financial Ombudsman Service uphold around one in four complaints relating to fraud and disputed transactions in favour of the customer, stating that in many cases banks have based their decisions ‘on a hunch’, without conducting a full investigation.

The Met has since clarified Sir Bernard’s comments, saying that he also agrees banks need to consider investing more in their security systems. However, if banks did not have to reimburse victims, what incentive would they have to protect their customers from fraud in the first place?

Should banks reimburse victims of online fraud?

Yes (97%, 28,600 Votes)

No (1%, 424 Votes)

Don't know (1%, 403 Votes)

Total Voters: 29,427

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David Roe says:
29 March 2016

As Banks are usually poor in service , products and Interest rates because the same people look after our money are those who had to be baled out by the tax payer then of course they should compensate.
How many viruses have put personal data at risk in the past 5 years at various Banking institutions?

mary says:
29 March 2016

One word, Unbelievable!

Steve Beaumont says:
29 March 2016

There should be an agreed level at which the responsibility becomes the customer’s. If you left your car or house unlocked the insurance company may not compensate you because you were negligent. I know a lot of people locally who let family and friends use their credit and debit cards.

Chazzy says:
29 March 2016

I’ve found a simple solution. I don’t do on-line banking! I agree with everyone who has blasted Hogan Hough. If the banks follow his suggestion I would suggest everyone refuse on-line banking, and on-line payments. The amount of money the banks and other organisations will lose will soon change their minds. Remember how much power you have as a consumer.

A.W.W says:
27 August 2016

Chazzy: just found this article. I am fed up with online banking, my bank has just changed the look of its website and so much harder to find things and all my auto payments list I had set up for bills has vanished. No idea how to set it up again. It made me fed up with online banking and I have decided to pay via other methods. In time, may change banks as my bank is an internet only bank.

Boblechien says:
29 March 2016

Has Sir B sorted out his post retirement employment yet?

How he can suggest the victim is to blame for a crime is incredible.

Scottie says:
2 April 2016

“Dear Sir , we have noticed that there is a virus on your computer. Give me access and I’ll sort it out for a small fee.”

Who is to blame when the user gives someone they don’t know access to their PC/laptop?


Scottie, “someone else” – they are always to blame. 🙂