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Scams super-complaint: consumers still at risk one year on

The PSR has announced it will publish an update on the industry's progress

Consumers remain unprotected from losing huge sums of money to bank transfer scams, a year after Which? filed a super-complaint to the Payment Systems Regulator (PSR).

Which? research indicates Brits may have lost millions of pounds to scammers by transferring funds to fraudulent accounts. However, unlike with other payment types, such as credit or debit cards, people who are tricked into transferring money to a fraudster currently have no legal right to get their money back from their bank.

The PSR today announced it would release its update on the banking industry’s progress towards tackling bank transfer scams in November.

Ahead of the report, Which? has called for the industry to show clear progress towards protecting consumers, including robust guidelines for financial institutions and a proposal to ensure victims aren’t left out of pocket.

Find out more: Safeguard us from scams – sign our petition to force action on scams

What are bank transfer scams?

When a victim is tricked into transferring money to a scammer’s bank account, this is known as a bank transfer scam – or an ‘authorised push payment’ (AAP) scam.

Most commonly, the victim believes they are paying for goods or services, not realising the scammer will never deliver – the PSR estimates that 85-95% of cases play out like this. Alternatively, the victim may believe they are paying a legitimate person or organisation, but the funds are misdirected into the scammer’s account.

The lost money can be life-changing. In some reported cases, people were tricked into transferring house deposits to fraudsters, who then withdrew the money and disappeared.

The PSR estimated that at least tens of thousands – if not hundreds of thousands – of people fall victim to such schemes every year. In the first two weeks of launching the online scams reporting tool in November 2016, more than 650 people told Which? they had lost over £5.5 million to bank transfer scams.

Find out more: Which? scam reporting tool – share your story

What is the PSR doing about scams?

On 23 September 2016, Which? launched a super-complaint to the PSR, calling on it to investigate whether banks are doing enough to protect consumers from bank transfer scams.

The PSR published its formal response in December 2016, finding that the way banks work together needs improvement, and that more could be done to identify fraudulent payments.

The regulator then launched a program aimed at reducing fraudsters’ ability to perpetrate scams and helping victims recover their money. Among other initiatives, UK Finance is working with the banking industry to collect better data on the scale of the problem, develop a joint approach to responding to scams, and improve information sharing between banks.

The PSR is also looking at the role of payment systems providers, and whether they could do more to help stop scams. The next update on its progress will be published in November 2017.

Which? calls for more protection from scams

One year after filing its super-complaint, Which? is calling for clear progress on a number of measures, including:

  • Robust guidelines for financial institutions to support victims of scams and the adoption of a best practice approach across industry.
  • Banks to demonstrate how they will enhance data sharing to improve their response to bank transfer scams.
  • An update on the progress of Confirmation of Payee and a commitment to implement it swiftly.
  • A proposal to ensure consumers are not left out of pocket when they fall victim to a bank transfer scam.

Gareth Shaw, Which? money expert, said: ‘The regulator must now clearly set out what progress has been made by banks, and what more they must do to ensure consumers who are tricked into making a payment to a fraudster are not left out of pocket.

‘Data sharing between banks and best practice standards must be agreed and adopted across the industry to make sure consumers are protected.’

If you want to see the government do more to protect you, sign our petition to force action against scammers.

Were you the victim of a scam? Share your story with our scams reporting tool.

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