/ Money

New industry code for bank transfer scams: how can it help?

bank transfer

Last Wednesday, the Payment Systems Regulator set out its plans for the design and development of an industry code to better protect people from bank transfer scams and provide a reimbursement scheme to help victims. Here, our guest, Paul Smith, the regulator’s head of policy, explains what it means..

Authorised push payment (APP) or bank transfer scams can have a devastating impact on peoples’ lives and we, the Payment Systems Regulator (PSR), want to make sure everyone is protected.

In the first six months of 2017, over £100m was stolen fraudulently as a result of people being tricked into transferring thousands of pounds to fraudsters. Our new plans are about protecting people by trying to prevent APP scams from happening in the first place and ensuring that banks help customers more effectively when, unfortunately, they do happen.

We’ve set out how we consider the issue can best be tackled, including through a new industry code, backed by the right for customers to raise complaints to the Financial Ombudsman Service (FOS). This will be in place by September 2018, paving the way for victims of APP scams to have better protection.

Better protection

From September 2018, the FOS can take this code into account as a relevant consideration when determining new complaints about APP scams. This means that victims of APP scams can be confident any claim for reimbursement will be given fairer consideration.

September isn’t that far away and so, to help us achieve our challenging timeline, we’ve set up a steering group made up of both consumer and industry representatives.

We know it’s important to bring together the right people to design the code and collaborate to deliver something that helps prevent these scams and works for everyone. The group will start their work this month, and Which? has agreed to be a member, representing consumers.

This is a complex piece of work and there is a lot to do from now until September, but it is essential we see, as soon as possible, a code that is effective in protecting people.

But the design of that code won’t be the end of the matter. Fraud is constantly changing and we expect the code will continue to evolve to keep pace in giving everyone the protection they need.

This is a guest contribution by Paul Smith. All views expressed here are Paul’s own and not necessarily those also shared by Which?.

What do you think about the PSR’s plans to introduce a new code to better protect people against bank transfer scams? What measures would you like to see be included in the code?

Comments

I agree. My friend transferred money to a fraudulent NatWest account. Whilst it was reported to the fraud squad and eventually to the banking ombudsman WHO FOUND IN FAVOUR OF THE BANK, I would like to know why a fraudulent account was set up in the first place. If you or I open a bank account, as well as signing in blood, we must produce passports, utility bills, etc. How come the fraudster didn’t have to do this? I firmly believe that NatWest was liable for my friend’s losses as they managed the fraudulent account.

Both a sending and a receiving bank are involved in these scams. If you are not an account holder of the receiving bank you cannot easily pursue an Ombudsman complaint. I was defrauded. My bank agreed they had failed to act in a timely fashion and had not given me appropriate information when I reported my suspicions. They offered me compensation of half the amount (good for Barclays!). The receiving bank refused my complaint (that they had not undertaken sufficient identification checks on the fraudsters who opened the receiving account), by simply stating they had carried out the necessary checks. As a result of some technicality the ombudsman decided to pursue my complaint but stated that the receiving bank may simply refuse to provide information on the grounds of “data protection”. It seems perverse that the Data Protection Act can be used to protect the identity of, or information about, people who have been engaged in a fraud.

I have been and am still waiting for a result from an online scam that meant I currently owe over £5000 to Paypal. This all started back in October last year when I was asked via a home working website to list some items on Ebay for someone. Turned out that A. The items never existed, B. The scammers were Romanian’s, C. I was totally unaware of both Paypal’s and Ebay rules regarding this however I have stated to Ebay that there are still people out there who are acting as re-sellers for goods that they do not even have in their possession. I was asked to prove items were in my possession whilst I know for a fact there are other sellers out there who do not physically have products in their possession.
My case is currently with both the Metropolitan Police in London who have now arrested the scammers , however getting the £5000 plus back is another matter. It was transferred from Paypal to my own bank account and then from my bank account to the Natwest Bank,whom, believe it or not, allowed these people to set up bank accounts with false identification. I am also in touch with the Financial Ombudsman because at the time I was scammed and told Coop bank to Stop the transfer, they not only did Not do it but delayed the request for 30 odd days. They have since stated that they do not believe they are responsible because I apparently authorised the transaction. The Ombudsman are now investigating this.
I , however, still have a fully suspended Ebay account and Paypal still demanding money from me and insusting that I am the criminal here. My crime was being a stupid idiotic Gullible person falling for a scam that has now cost me over £5000. I was suffering from depression when this happened. Suicide seems like a very good option when you are already in debt and you thought someone was offering you a lifeline. I will never do anything like this ever again.

Thanks for sharing your story with us. Scams like this can have such a huge financial and emotional toll. Please remember if you need to speak to a money expert you can call our helpline on 01992 822 848 or feel free to email us under the ‘Need help?’ tab at the top of this page. We recommend that you speak to Samaritans for support also, you can contact them on 116 123.

Please keep us updated with your case – I wish you all the best of luck.

Thank you

I am a small computer dealer and have had some private customers who have been defrauded. It seems to me that the level of attempts has reached a level that should be better controlled. The whole answer is not simply for the banks to make good loses, that covers up our government’s failure to invest in policing. This deficiency costs us in various ways more than what we would pay in increasing taxes to adequately police telecommunications and internet services.

Nevertheless I still support this initiative and wish it all the best.

Policing does not need any increasing in funds until we see a huge improvement in the use of existing funds. Police ignore too many cases of crime by ethnic groups, especially Irish travellers, East European gypsies here or African origin criminals.
If an account has been properly checked I cannot understand how the bank cannot recover the money as they did for the quarter million wrongly paid into our account. Any scammer account must have been the result of negligence in carrying out checks by the bank.

My view is that transfers in should be allowed, but transfers out require that the customer has explicitly agreed to a transfer to a nominated account (as for direct debits). If the bank honour a request to transfer founds out without such a prior agreement then they should be held accountable and have to reimburse. This enables one to give out your bank number to anyone who owes you money, but without fear that you will be stripped of all your account contents.

If you pay someone and they don’t deliver the goods, and then refuse to repay the money, then this to me looks like a case for civil action through the small claims court rather than a bank responsibility.

Ian Laschke says:
9 March 2018

By all means have a poll, but ask a question and give the alternative answers without adding your words to the answer. If you want the answer embellished then provide some alternatives and let us choose why we do or do not want something. My comment does NOT mean that I agree to your terms and conditions and community guidelines. If you want that agreement it should be made clear from the start.

You really need to get to grips with what is acceptable!

So many mentions along the lines of “bank should pay”. Banks could only pay either from their profits or by increasing costs to their customers. Guess which would happen, given that the profiting shareholders ultimately decide what management will do?

I really don’t want to lose money to recompensing someone … er… inattentive enough to transfer their life savings to an unknown beneficiary – that would just be daft! But by all means introduce a thinking-time delay into payments, and tighten up account identification.

My business partner and I were defrauded of just over £66,000 in September 2016 by a fraudster using a Nationwide Account.
After many false starts we finally managed to get the police involved (Not Action Fraud who proved utterly useless and wasted a lot of time) who found Nationwide’s due diligence (KYC) to be sub-standard. Armed with this information, I contacted The Nationwide again who brushed us off for a second time making it clear they were not interested in compensating us in any manner shape or form.
There are so many loopholes in the system nothing joins up so a major overhaul needs to take place asap. The Financial Ombudsman which I thought was meant to protect consumers is, in my experience, more interested in protecting the banks. The FCA is not allowed to report their findings back to you which again makes me suspicious that they are more interested in protecting the banks to the detriment of the consumer.

When I pay a cheque into my account the credit shows up initially as uncleared funds. It might be a good idea to use a variation of this for transfers so that the payer can confirm with the receiver that the funds have been received before the payer finalises the payment. This would give the payer a further opportunity to satisfy him/herself that the money really has gone to the person they intended it to.

This is not enough! My mother was suffering early onset dementia and lost 80k due to a builder befriending her and subtly convincing her that she needed this and that done. She regularly withdrew 1k and 2k in cash from her building society and they didn’t do anything to stop it. Bank transfer is therefore not the only scam that banks should be held responsible for, they should have a duty of care to the elderly and infirm…

No this is a valid transaction the bank does not have any duty to interfere with. The state does have a duty to see that crime is traced and punished but regrettably the police these days are more interested in historic cases of mildly overstepping good taste with an ill considered remark by a young man now near retirement than in swindles and burglary.

There is an assumption that regulators are there to protect the public.

Anyone who who reads Private Eye will know that the Banks and the City are very powerful and “connected”. Therefore the FSA , the fundamentally Supine Authority, the FCA and the Financial Ombudsman and many others are paper tigers.

Unfortunately there does not seem to be a large consumer champion interested in interceding on behalf of the public. And there is a lot of naughtiness going on – and this includes transnational Accountants who are meant to be the guys providing honest accounts. Apparently though accountants are also untrustworthy though possibly the mainly the majors.

Everyone should be prepared to raise a voice against systems and people operating in devious ways ro criminal to do down the public.

The Banks as a whole have an appalling record and it would be nice if Which? actually documented these details of corporate wrongdoing so we the customers can see if we like the ethics. The other point is that when using cheques the Banks are liable if they are wrongfully converted – that is paid into the wrong account. There is a whole stack of case law on this.

The push to convenience and “speed” has resulted in a whole raft of legal protection being lost. Using a cheque may save some grief. The fact that some banks, the Nationwide is mentioned above, have been poor at Account opening – which is an area that banking law still applies to , should be pursued in all cases as I would bet quite heavily that the transactions through many rogue’s accounts are out of keeping with the account information. Bank’s are meant to query unusual transactions and I am guessing they rarely do.

We need some high profile cases, a la Noel Edmonds to break this cosy cartel of the clearing banks and there so-called rules with which they try to obscure banking law.*

Finance various
sbcb.org.uk/2015/01/23/fca-colluded-to-cover-up-alleged-hsbc-fraud/
fcpablog.com/blog/2018/1/22/six-cpas-charged-with-stealing-pcaob-information-to-help-kpm.html
propertyindustryeye.com/countrywide-probes-claim-that-agents-pressured-customers-to-use-in-house-mortgage-advisers/
fcpablog.com/blog/2018/3/1/deloitte-pays-150-million-for-blown-mortgage-company-audits.html

Carillion
accountancylive.com/fd-whistleblower-warned-carillion-accounting-problems

Care homes
compassionincare.com/sites/default/files/breakingsilence/Parkview%20Bolton%20Investigation%20Part%20One%20by%20Compassion%20In%20Care%20%2005.03.18.pdf

* I studied it for three years

‘I paid £4,400 into Lloyds/TSB after ascertaining the recipients details were all in order from the cashier.At that point after the reassurance I paid the cash into a fraudulent account.
Lloyds/TSB wouldn’t freeze the account when I asked them to and they maintain they did nothing wrong.
Where is the duty of care?

Many scams are only possible because the banks do not check the account name matches the account number. Where the account name and number do not match the banks must be automatically and unconditionally held liable and it should not be voluntary as this is negligence brought about by a historic situation. In the early days of computing memory sizes meant it was not possible to store all the data needed. That has long since been untrue but banks have not bothered to reinstate a basic security essential in this global crime world.

Where account holders are stupid then they must equally be held liable not the bank. Most of the scams use transfers to a well known name but a faked account number but still banks get away with not compensating so have no reason to take even minimal care.

Also how are scammers setting up bank accounts in spite of anti terror rules about identification? How many of these scammers are just criminals and not bombers? They cannot know so are breaking the law as well as being grossly negligent.

Roger Ireland says:
9 March 2018

There is no reason why bank transfers can’t be traceable. We are told that it can’t be done in some cases but banks should not be allowed to do any transfers where the payee cannot be identified.
Simply making banks compensate is not the answer; it means the frausters keep the money and we all pay in the end; it rewards carelessness; it also means crooks will try to set up transfers so that compensation can be fraudulently claimed.
The answer is to identify fraudsters and convict them not encourage them to continue.

I was scammed out of £100, this week and I contacted my bank within 2 minutes of the transfer as I was unusually able to confirm it was a scam quickly. I also called Action Fraud within five minutes. The out of hours fraud dept at Natwest couldn’t do anything so I had to wait until the morning to report it to my bank (!).
I provided them both with the scammers’ bank details and mobile telephone number yet three days later the same scam is continuing with the same bank details and telephone number. Hundreds of victims have probably fallen victim to this scams unnecessarily. The banks don’t even want to protect the victims of scams or would have followed up. Something needs to change to make the banks want to take advantage of information which a victim is desperate to pass on to prevent further victims.
The police certainly don’t want to do anything promptly, if they did they would just use the mobile number or i.p. address to locate and arrest the scammer and obtain their electronic devices where all the information they would need would be available.
As most of these frauds take place via social media there should be a law forcing them all to have a reporting button for fraud, Facebook do not offer any way of reporting a fraud taking place via an account which could be hacked or cloned so a person is able to move from one marketplace group to the next and on and on. Pathetic lack of interest in stopping criminals.

Yes i am grateful was on the end if bank fraud recently i was broken became depressed and withdrawn and the criminals refused to reimburse me

I got scammed out of £630 just before Christmas using PayPal and ended up laundering money for a scammer into a Lloyds fraudulant account in Chelmsford Essex. No redress, not their fault all my fault it seems even though they’d allowed up to ten fraudulant accounts to be opened in one persons name using facebook. I’m left to pay it all back over two years on a loan.

You all should know that the banks will always pass on the costs to everyone who is a customer of their bank. This cannot mean that people can make “unwise” decisions and hope everyone else to bail them out if things go wrong, you still need to do as much background checking before you give away your hard earned money. Only then can you be assured that the banks will protect your money.

I believe it is time for banks to face up to their responsibilities really.
We the customers place our trust in them.

I am hoping that the scheme will be retrospective. For many the damage has already been done and there are those who lost money even only last year who are suffering. Banks also need to be cleared of their interpretation of who is a valid or invalid company and especially when there has been a breach of contract. Scams are often initiated by very professional people who have been taught to make promises and take money in very convincing ways.