Which? is today urging the regulator to make banks come clean about whether customers who fall victim to bank transfer fraud are being reimbursed their losses.
Last month, we contacted the UK’s biggest banks and building societies urging them to commit to publishing their reimbursement rates by 28 May, but almost all banks failed to do so.
Bank transfer fraud costs consumers hundreds of millions of pounds every year, and we believe a lack of transparency in how banks are treating their customers means scam victims are being treated inconsistently and unfairly.
How do bank transfer scams work?
APP fraud – also known as bank transfer fraud – is when people are convinced to transfer money from their own bank account to one belonging to a scammer.
For example, the scammer may call and pose as a member of your bank’s fraud team. They will warn you that you need to move your money to a safe account, before disappearing once you’ve transferred the cash. Victims lose hundreds of millions of pounds to APP scams each year.
Many of the UK’s biggest banks and building societies are signed up a voluntary code, which is based on the principle that blameless victims of bank transfer scams should be reimbursed their losses.
Banks have been reluctant to say how many customers they’ve refunded. In May, Barclays became the first major bank to publish its data, but the figures only cover the first two months of the year, so paint only a fraction of the full picture.
TSB is the exception to this rule. It isn’t signed up to the voluntary code, but says it refunds 99% of customers who fall victim to fraud under its own fraud refund guarantee.
- Find out more: what to do if you fall victim to an APP scam
Banks routinely blame scam victims
We believe all banks should publish figures on fraud refunds on a regular basis, rather than cherry-picking specific months. Greater transparency is needed as in many cases banks are blaming customers rather than reimbursing them.
Figures released by the Lending Standards Board, which oversees the voluntary code, show that banks only reimburse a minority of fraud victims.
Between May 2019, when the code was introduced, and July 2020, banks ruled that 77% of fraud victims were partially or fully to blame for their losses.
In 60% of cases, customers were found to be fully at fault (and thus liable for their losses). Victims were only considered blameless in 11% of cases.
Reimbursement levels vary significantly between banks, but as the data is anonymous it’s impossible to see which offer the greatest support for scam victims – and which need to do significantly better.
Why aren’t banks publishing their data?
We wrote to the UK’s biggest banks and building societies last month, urging them to commit to regularly their publishing reimbursement rates. Barclays was the only bank to respond saying it would publish figures ‘periodically’.
Banks gave a series of reasons for refusing to publish their rates, including the following:
- Publishing reimbursement rates alone would not give a full picture of a provider’s ability to prevent fraud and protect customers.
- Low reimbursement rates could signify a bank has high levels of fraud protection and successful scams could be more likely to involve customer error.
- Publishing data could potentially drive criminal behaviour towards banks perceived to have weaker fraud protection.
- Publishing rates would detract from the need to focus on criminals and the growing threat of financial crime.
What we’re doing to help consumers
We don’t believe any any of the above responses prevent banks from being more transparent. Instead, these responses underline that the regulator has no choice but to act on its proposals to make firms publish their figures.
Gareth Shaw of Which? Money says: ‘Without greater transparency, inconsistent and unfair treatment of scam victims will continue, and the chances of having their losses returned will remain a lottery.
‘This situation cannot continue. The Payment Systems Regulator (PSR) must now take action and order all firms to publish this information regularly and in full, as part of a range of measures to resolve the systemic problems with how victims of this crime are handled.’
In a statement, the PSR said: ‘We are currently reviewing the responses to our call for views and the responses will inform our next steps, including whether regulatory intervention is required.
‘Our plan is to consult on the next steps in the next few months’.
How to get your money back
If you think you’ve been scammed, you should contact your bank immediately. Time is of the essence, as your bank may be able to stop the transaction from going through or recover money from the scammer’s account.
You should also contact the bank the money was sent to and provide it with the account number the fraudster gave you.
If your bank is signed up to the code, it should reimburse you the money, as long as you can show you’ve paid attention to warnings it provided before making the transfer, had a reasonable basis for believing that the the person you were paying was genuine, or are considered vulnerable.
If your bank isn’t signed up to the code, you should make a formal complaint after reporting the scam. You can use our template letter as a guide.
If your bank refuses to offer you a refund, you can escalate your complaint to the financial ombudsman.
- Find out more: sign up for Which? scam alerts