/ Money

Update: stopping bank transfer scams – what would meaningful action look like?

Bank scams

Our research has found that people are still losing life-changing sums of money to fraudsters exploiting bank transfer payments. So, how much longer should we wait for effective action from industry?

Last year, as part of our super-complaint to the Payment Systems Regulator, we collected evidence from nearly 600 victims of fraud who told us they’d collectively lost over £5.5m to bank transfer scams.

Five months on from the PSR’s response saying that they’d found evidence that banks could be doing more, we’ve been checking to see if anything has changed.

Stop scams

We’ve found that people are still exposed when it comes to bank transfer scams, with many losing significant sums of money.

Despite fraudsters continuing to exploit bank transfer scams, we’ve not seen enough evidence that banks are making progress to protect their customers.

Roger and his wife lost £2,000 to a scammer posing as their gardener:

And cases like Roger’s are far from unique. In fact, our latest research reveals that one in 10 people in the UK had made a bank transfer, or knew someone that had made a payment, that later turned out to be to a fraudster. And of those people who had lost money to bank transfer scams, more than half had been victims in the last six months.


Huge sums of money are being lost to these fraudsters, and we found that nearly four in 10 didn’t get any money back at all.

So, today we’ve written to banks calling for them to clearly outline what action they are taking to safeguard consumers from bank transfer scams.

Bank scams

When it comes to banking the general expectation is that banks will look after you as their customer and your money too. But with so many continuing to lose such large sums of money to fraudsters exploiting the system, it’s clear more needs to be done.

The industry, regulator and next government need to urgently take action to tackle financial fraud. We want the next government to set out an ambitious plan to ensure that financial institutions do more to protect consumers from bank transfer scams.

We need your help to do this – please share your scams experiences with us and help keep the pressure on to deliver this change.

Tell us your scams story

Confirmation of Payee plans announced

Update, 11 December: The Payments Strategy Forum has outlined plans for a new payments system architecture in the UK.

One area that the Forum has been examining is ‘Confirmation of Payee’. Currently, when you make a payment to someone the bank will check that the account number and sort code you provide matches the ones on the account you wish to pay.

Throughout our scams campaign, we’ve heard of lots of stories where victims of scams have lost huge sums of money where they have believed they are making genuine payments for things like conveyancing fees or building work, but instead they are using bogus bank details sent to them by scammers.

The Forum has outlined that customers wishing to make a bank transfer will have to now enter the exact name on the account, as well as the other details. This would mean that when you transfer funds to another account the system would also need to confirm the name of the account you are paying matches the name you’ve provided.

If the transfer is to a person, the confirmation system will check to verify if the details are a match or not. If the transfer is a business, the confirmation system will return with the name, address and registration number of the company so that the consumer can check it.

The hope is that this confirmation system will encourage customers to verify details before transferring any money and also help to tackle one aspect of bank transfer scams.

The system will be available from December 2018, although it will be voluntary as to whether your bank offers it to you when you make a payment

We’ve been calling for confirmation of payee for some time now, so while we welcome its introduction, we believe it’s important that banks quickly act to introduce this measure to help protect their customers from scams.

Our Money expert, Gareth Shaw, said:

‘Hundreds of millions of pounds are being lost to these increasingly complex scams, so introducing confirmation of payee is a vital step towards boosting consumer protection.

‘With consumers still at risk of losing-life changing sums of money, banks must now urgently adopt these proposals.’

Update: 28 February 2018

Win! The regulator has confirmed plans and timeframe for scams reimbursement scheme. Following its consultation on a reimbursement scheme for victims of bank transfer scams, the Payments Systems Regulator (PSR) has today confirmed that it will press ahead with plans to better protect scams victims.

It has also announced the formation of a steering group to design the code that will underpin the reimbursement scheme, setting out the members as well as the key principles and objectives of the group for the next six months. Forming this steering group alongside Which? are Age UK, Toynbee Hall, and representatives from the banking and tech industries.

The group will deliver an interim set of rules by the end of September. These will then be consulted on with a final set agreed by the end of the year.

However, from September, the Financial Ombudsman Service (FOS) will be able to use the draft code when determining new consumer complaints about authorised push payment scams.

We welcome today’s announcement as a step in the right direction. We hope that this will help to ensure the reimbursement scheme properly compensates victims who have been left out of pocket through no fault of their own.

However, the industry must also use other measures to better protect consumers at the point of transfer to stop such scams happening in the first place. These measures could include confirmation of payee, which would add an additional check before a bank transfer is made.

Do you want your bank to sign up to Confirmation of Payee to help protect you from bank transfer scams? What should the banks to do to protect their customers from losing money to bank transfers? Do you think the next government should tackle scams and financial fraud?

Comments
Guest
Gail Williams says:
14 January 2018

Years ago, back in the 60’s when I was a bank clerk, before computerisation, Account Payee, Account number and Sort Code were all checked for exact match and if it didn’t match EXACTLY the credit or debit would be ‘bounced’.
I NEVER do a BACS transfer without putting the EXACT payee account name on the transfer. At least by doing this you have ‘some’ redress with you bank if it goes to the wrong account. I know most people don’t bother these days as it’s not strictly necessary but without the payee’s name on the transfer you don’t stand any chance of compensation.

Guest
Aremgee says:
26 January 2018

This might also help prevent people paying out to scam HMRC claims. If banks not only check with the payee but also check the receivers details the poor vulnerable people like the lady who recently had a frightening telephone call shortly after her husband died telling her that a court action was being taken to seize her home for non payment of tax might be saved losing a lot of money

Guest

Picking up on the earlier mention of a cashless society, has anyone given thought to the countless charities that rely on income from coffee mornings, sales of work, bring and buys, raffles, etc. etc. How are people supposed to pay for items at these events? Also, what about smaller clubs badminton, choirs, craft groups etc. I heard from someone trying to open a bank account for one of these recently. The Post Office manager told her she couldn’t open one there and she’d already tried at least one bank without success. Is this the start of banks refusing to work with cash. I recently tried to pay in a sum of cash amounting to approx £150 mostly in £2.00 coins. I was told to come back when I’d put it in the relevant bags and although the’d seen the cash and should have been able to tell roughly how many were needed, I was not to take in more than ten bags. Definitely a move to stop handling cash. I worked in a bank for many years and counting cash was deemed to be Customer Service. There isn’t a lot of that in local banks nowadays.

Guest

The banks cannot stop cash because it is made and issued by the government, but they could, theoretically, cease to handle it,although that might put them in breach of their banking licence authorised by the Bank of England. I think I shall start getting cash from the counter in future and present the cashiers with cheques for odd amounts like £34.27.

Guest
Ruth says:
27 January 2018

I am concerned that by forcing the customer to confirm the payee is ‘correct’, the liability if they have been scammed falls on the customer. The banks must know who these scammers are, and if they don’t, they SHOULD be able to find out. I have been very upset to read in a comment here that the ‘official’ fraud body does nothing, even when they are helped by a victim. What is that body FOR, if it doesn’t help catch these vermin? The cuts to the Police service are shameful in my view – you can see how ‘saving’ money in taxes COSTS everybody so much in other ways!

Guest

I have heard stories of people being duped by email and text to send money into fake accounts for real purchases including house sales. While I want there to be a balance between barriers to opening a new bank account and protecting consumers I feel banks could do more to mitigate risks. They have the ability to flag risky transactions for credit card purchases if someone is suddenly sending £10,000 online to a new account or a new account is receiving large sums of money this should be flagged. On a personal note I always send a test payment of 1p when sending money to new accounts. I then check directly with the receiver such as my credit card company that it has arrived before sending any more money. If this is for a large purchase such as a house I would confirm in person that they received it.

Guest

Hi everyone, some good news for our scams campaign supporters today – following its consultation on a reimbursement scheme for victims of bank transfer scams, the Payments Systems Regulator (PSR) has confirmed that it will press ahead with plans to better protect scams victims.

It has also announced the formation of a steering group to design the code that will underpin the reimbursement scheme, setting out the members as well as the key principles and objectives of the group for the next six months. Forming this steering group alongside Which? are Age UK, Toynbee Hall, and representatives from the banking and tech industries.

The group will deliver an interim set of rules by the end of September. These will then be consulted on with a final set agreed by the end of the year.

However, from September, the Financial Ombudsman Service (FOS) will be able to use the draft code when determining new consumer complaints about authorised push payment scams.