A total of £207.8m was lost to bank transfer fraud in the first half of 2020, in line with the same period last year, despite most banks having signed up to a code aimed at protecting people from these types of scams.
Latest figures from banking association UK Finance, show the number of people getting their money back from bank transfer scams has risen following the introduction of the Authorised Push Payment Scams Voluntary Code in May 2019.
Finance providers were able to return £73.1m of bank transfer fraud losses to victims in the first half of this year, up 86% compared with the same period in 2019. Of this, £47.9m was reimbursed under the Code.
However, £73.1m still only represents just over a third of money lost.
Here, Which? looks at the data in more detail, explains how bank transfer fraud works and what you can do if you’ve fallen victim to a bank transfer scam.
What’s a bank transfer scam?
A bank transfer scam, technically referred to as authorised push payment (APP) fraud, occurs when someone is tricked into sending money to a criminal’s bank account.
For example, a scammer pretends to be from your bank’s fraud team and warns that you need to move your money to a safe account, but it’s actually an account the fraudster controls.
Fraudsters often pose as your solicitor or official bodies such as HMRC, using sophisticated methods of impersonation – ‘spoofing’ the real contact details of these organisations to try and convince you.
- Find out more: what to do if you’re the victim of an APP scam
How are banks supposed to protect you under the Code?
If your bank or building society is signed up to the voluntary Code it should reimburse you if you’ve fallen victim to an APP scam and aren’t ‘to blame’, as the Code puts it.
Banks signed up to the Code also need to take steps to protect you including:
- Educating customers about APP scams
- Identifying higher-risk payments and customers who are vulnerable and so have a higher risk of becoming a victim
- Providing effective warnings to customers if the bank identifies an APP scam risk – these could be messages when you go to make a payment or set up a new payee
- Talking to customers about payments and even delaying or stopping payments where there are scam concerns
- Acting quickly when a scam is reported to it
- Taking steps to stop fraudsters opening bank accounts.
The Code only applies to transfers between UK accounts. Overseas accounts aren’t covered.
Our guide lists the banks signed up to the Code.
Has the Code helped victims?
Since the Code was introduced, the proportion of money being returned to victims by signatory banks has actually fallen.
In the second half of 2019, 41% of money lost was reimbursed.
In the first half of 2020, that figure fell to 38%.
Both numbers are too low, given that the Payment Services Regulator stated back in August that ‘repatriation or reimbursement should occur in the vast majority of APP scam cases assessed under the Code’.
Reimbursement levels were higher for more sophisticated scams in which criminals impersonate other organisations to target their victims. Some 54% of losses were reimbursed for bank and police impersonation scams.
Cases involving losses of more than £10,000 were more likely to lead to reimbursement then cases involving smaller amounts of money.
These figures do not include all money returned to APP fraud victims in all cases, for example in some instances where the customer was found at fault under the Code, but the bank was able to trace and return the original stolen funds.
- Find out more: the bank transfer scam refund lottery
The long-term challenge to deliver consistent outcomes
There’s clearly a long-term challenge to ensure consumers are reimbursed and protected from such scams in the first place.
Not only are reimbursement rates unacceptably low, but there is too much inconsistency in how the Code is applied.
And those are just the challenges faced by customers of signatory banks.
Customers of other banks, which currently aren’t required to sign up, have even less protection. The exception is TSB, which since April 2019 says it has reimbursed 100% of ‘innocent’ victims through its Fraud Refund Guarantee.
The Code’s voluntary basis simply isn’t working and Which? believes all banks should have to sign up.
The government should also tackle the root cause of many of these scams by adding fraud carried out through online platforms to its regulation of online harms.
- Find out more: sign up to free Which? scam alert emails
What to do if you’ve fallen victim to a bank transfer scam
If you think you’ve been scammed, contact your bank and the receiving bank immediately.
The banks may be able stop the transaction going ahead, or recover the money from the fraudster’s account.
If that fails, and your bank is a signatory to the Code, you should request to be reimbursed.
And if either your bank or the fraudsters bank is a signatory, you should make formal complaints if you believe either have not carried out their obligations under the code.
If you’re unsuccessful, you can escalate the case to the Financial Ombudsman Service, which is already using the Code to rule on cases.
- Find out more: how to get your money back after a scam