Banks will be forced to reimburse blameless fraud victims: Customers tricked into sending money to fraudsters will be legally entitled to compensation under government plans
- Payment Systems Regulator said barriers stop victims getting their money back
- The plans will also make banks publish how often they reimburse fraud victims
- Hundreds of millions of pounds still lost to scammers every year across Britain
The UK’s biggest banks could soon be forced to reimburse blameless victims of fraud under new government proposals.
It comes after a consultation by the Payment Systems Regulator (PSR) suggested there are currently too many barriers in place preventing victims from getting their money back.
Under the new plans, the likes of HSBC, Barclays and the AIB group could also be required to publish how often they pay back money to clients who have fallen prey to ‘authorised push payment’ (APP) scams.
An APP scam is when someone willingly transfers money from their own banking account to a scammer’s.
Hundreds of millions of pounds are still being lost to tricksters every year as they continue to come up with sophisticated schemes.
Under the new plans, the likes of HSBC, Barclays and the AIB group could also be required to publish how often they pay back money to clients who have fallen prey to ‘authorised push payment’ (APP) scams
Many banks have already signed up to a voluntary reimbursement code, which enables people to get their money back in situations where neither they, nor their bank, is to blame – but campaigners say the code does not go far enough (Pictured: Co-op Bank and Lloyds Bank)
Hundreds of millions of pounds are still being lost to tricksters every year as they continue to come up with sophisticated schemes (file photo)
Anabel Hoult, chief executive, of Which?, which previously made a super complaint on bank transfer scams, described the proposal as ‘a huge win for consumers’.
She said: ‘People are still losing life-changing sums of money every day, so the Treasury must move swiftly towards introducing the necessary legislation.
‘Which? has been calling for banks to come clean on how they treat fraud victims, so it’s positive that the PSR is planning to direct firms to publish data that shows fraud case numbers and how often they reimburse customers.
‘The banks must cooperate fully with putting in place these long-overdue requirements.’
In the first half of 2021, £355 million was lost to APP scams, overtaking card fraud losses.
A consultation by the Payment Systems Regulator (PSR) suggested there are currently too many barriers in place preventing fraud victims from getting their money back (file photo)
Fraudsters are taking advantage of well-known lottery draws to trick people into handing over money and personal information, police have warned.
Victims have handed over almost £1 million to lottery fraudsters during the past seven months, reporting centre Action Fraud and City of London Police said.
Criminals have been contacting victims informing them they have won a lottery or prize draw but must pay an ‘advance fee’ to receive their winnings.
The winnings are non-existent and criminals are attempting to steal the victim’s money or personal and financial information.
Temporary detective chief inspector Craig Mullish, from the City of London Police, said: ‘Criminals are experts at impersonating organisations and will mimic a number of well-known prize draws to take advantage of unsuspecting victims.
‘Remember, you can’t win a draw that you haven’t entered so if you’re contacted out of the blue claiming you’ve won a prize draw but can only access these winnings by paying an advance fee: stop and think as it’s likely to be a scam.
‘This could protect you and your money.’
Action Fraud said it received 629 reports of lottery fraud between April and October 2021, with 89 per cent of cases mentioning well-known prize draws.
Impersonation of People’s Postcode Lottery accounted for 49% of all reports.
Some 70 per cent of victims were aged over 50, with those aged over 65 making up 40 per cent of reports.
More than half of victims (59 per cent) were contacted by telephone, 21 per cent received an email and 10 per cent received their fraud attempt through the post.
Almost half of victims (41 per cent) said they were asked to pay the advance fee to release the alleged winnings by purchasing gift cards and relaying codes to the fraudster.
Fraudsters use gift cards as a form of payment as they can be easily redeemed and sold on. Criminals do not need the physical card to redeem the value and instead ask victims to share the serial code on the back of the card with them.
Other victims provided their bank details after being told they would receive a small payment to verify their account, but criminals used these details to steal money.
People’s Postcode Lottery managing director Clara Govier said: ‘Please remember, People’s Postcode Lottery will never ask for any kind of payment to claim a prize, you can’t win if you don’t play, and we don’t offer discount cards.
‘We know scammers often use social media. Our official social media accounts are verified so there’ll always be a blue tick beside our name. If there isn’t, the message isn’t from us.
‘Finally, we encourage anyone who believes they have been the victim of fraudsters to contact our colleagues at Action Fraud or the police.’
Anyone who thinks they have been a victim of fraud should contact their bank immediately and report it to Action Fraud online at actionfraud.police.uk or by calling 0300 123 2040.
‘Scams can be highly sophisticated, with criminals posing as legitimate organisations such as banks, government bodies or the police.
Many banks have already signed up to a voluntary reimbursement code, which enables people to get their money back in situations where neither they, nor their bank, is to blame.
Before the voluntary code was introduced, victims could not claim refunds as they had authorised the transaction.
But consumer campaigners have said scam victims often face a lottery as to whether they will get their money back under the code, with banks interpreting it in different ways.
They have also highlighted a lack of transparency concerning banks’ reimbursement rates.
The PSR is consulting on proposals that would mean directing large banks and building societies to publish data on their performance in relation to APP scams, including reimbursement levels for victims.
This group would include AIB Group (UK), Bank of Scotland, Barclays, Clydesdale Bank, the Co-operative Bank, HSBC, Lloyds, Metro Bank, Monzo, NatWest/RBS, Nationwide Building Society, Northern Bank, Santander, Starling Bank, TSB, Ulster Bank and Virgin Money.
TSB already has its own fraud refund guarantee and publishes its reimbursement rate under the guarantee.
John Glen, Economic Secretary to the Treasury, said of the Government’s plans: ‘Push payment fraud is posing an escalating risk to UK customers, with increasingly sophisticated scams that can be detrimental to people’s lives.
‘The Government’s position is that liability and reimbursement requirements on firms need to be clear so that customers are suitably protected.
‘It is welcome that the Payment Systems Regulator is consulting on measures to that end, and to help prevent these scams from happening in the first place.
‘The Government will also legislate to address any barriers to regulatory action at the earliest opportunity.’
Chris Hemsley, managing director of the PSR, said: ‘The growing problem of APP scams has seen people lose devastating amounts of money.
‘More needs to be done and, while voluntary industry measures have helped some victims, there are many institutions which have yet to step up to the mark and protect people properly – including social media firms.
‘The range of steps we plan to take will show people which banks and building societies are likely to respond to frauds in the right way and will put the onus on financial institutions to get better at detecting and preventing scams.
‘We are also setting out the way to make reimbursement mandatory for those blameless victims so that, when the law is changed, we are ready to act as quickly as possible to get protections to the people who need them.’
Katy Worobec, managing director of economic crime at UK Finance, said the banking industry’s primary focus is always on stopping scams happening in the first place.
She said: ‘Over £300 million has been reimbursed to thousands of customers since the APP voluntary code was introduced in 2019.
‘We agree that more needs to be done and have long called for a regulated code, backed by legislation, to ensure consumer protections apply consistently.’
She added: ‘As the PSR recognises, other industries have a key role to play in tackling fraud, which is why it’s so important that there is coordinated action from Government and other sectors to tackle what is now a national security threat.
‘It’s also why we believe any fraud data should highlight the external drivers of fraud, such as data breaches, social media and other online platforms.’
The PSR’s consultation is open until January 14 2022.
What is ‘authorised push payment’ fraud and do banks have to reimburse victims under current rules?
With both the complexity and number of scams continuing to rise, many people might be wondering what their rights are if they mistakenly send money to a fraudster.
When you willingly transfer money from your own banking account to a scammer’s, this is known as ‘authorised push payment’ fraud (APP).
Eight UK banking groups have so far signed up to a 2019 voluntary code that protects consumers from APP.
These are: Barclays, HSBC, Santander, Co-op, Lloyds, Metro, Starling and National Westminster Bank PLC.
Often banks will say the customer did not take enough care or carry out sufficient checks before making a payment.
But the voluntary code states only that customers need to have a ‘reasonable basis’ for believing the payee is whom they expect.
Customers must therefore explain why they believed the person they were paying was legitimate.
The code also states that banks must provide customers with ‘effective warnings’ when they are making an unusual payment – such as when you’re paying someone new.
If your bank failed to do this, make sure you include this information within your complaint.
Consumers should also tell their bank if they are vulnerable, because they are obliged to take extra measures to ensure you are protected.
While the code was a step in a right direction consumer campaigners have said scam victims often face a lottery as to whether they will get their money back, with banks interpreting it in different ways.
They have also highlighted a lack of transparency concerning banks’ reimbursement rates.
Under the proposals announced this week, banks would not be able to avoid reimbursing scam victims – while their performance on doing so would be made public.
Woman, 50, who lost her £113,000 life savings when she was conned by dating site fraudster into paying a ‘ransom’ to his ‘kidnappers’ claims she is facing bankruptcy because her banks won’t reimburse the stolen money
By Jacob Thorburn for Mail Online
A woman who was conned out of £113,000 by a Facebook fraudster says she’s facing bankruptcy after claiming her banks would not reimburse her lost money.
Rachel Elwell, 50, from Brownhills, West Midlands, was the victim of an elaborate romance scam after being contacted by an ‘attractive’ and ‘intelligent’ man on Facebook at the start of 2021.
After speaking for months and convincing her that he was being held captive in Eastern Europe and in desperate need of money, Ms Elwell sent the scammer tens thousands of pounds.
By April 1, 2021, Ms Elwell realised the magnitude of her problem after giving the fraudster nearly £113,000 and her world ‘came crashing down’ around her.
Her case has been the subject of a three-month investigation from Santander and HSBC, and she hoped she would be covered by a code of conduct that supports fraud victims.
However, Rachel says she has been left in ‘a devastating situation’ after claiming the bank concluded she would not be eligible for reimbursement of the money lost.
Rachel Elwell, 50, from Brownhills, West Midlands, lost £113,000 and is facing bankruptcy after an elaborate four month scam
Pictured is the ‘scammer’, whose face has been blurred for legal reasons, allegedly being held captive in a cellar by loan sharks in Ukraine
Rachel said: ‘I am in a devastating situation. The banks have found me liable and I am left with suicidal thoughts.
‘I don’t believe I had a fair investigation and I feel as though I have been robbed twice. The way I have been treated is shocking.’
Rachel borrowed tens of thousands of pounds on credit cards and loans and sent it to the fraudster through her banks.
Rachel says she sent £36,425 through Santander between January 22 and February 19. She says she also transferred £62,350 through HSBC, totalling £98,775.
Her total losses add up to £112,575 – as well as claiming her sister also sent £13,800 from a different bank – which is still under investigation.
But both banks have dismissed her case.
The conman (above) initially requested small sums of money, but managed to eventually convince Ms Elwell to transfer him tens of thousands of pounds at a time
The fraudster sent Ms Elwell pictures of everything from him boarding flights (above) to smiley snaps of him and his supposed daughter
Rachel accepts she was fooled and has stressed she does not expect special treatment.
She said: ‘I have never disputed that I authorised the payments.
‘I know this is my mistake, but under their code I am eligible for help and I just want to be treated fairly which is why I am taking this further.’
Rachel claims she is now being chased by credit cards and loans and added: ‘I am fighting for my life now, I stand to lose everything I have ever worked for.
‘I am suicidal and a review could take up to four months but I now have very demanding creditors on my back. I am begging them for some breathing space.
‘I am going to fight this, I am a victim of crime and I am prepared to take the banking industry on because they are ignoring their own code of conduct.’
Rachel is now hoping that an impartial review by the Financial Ombudsman and Financial Conduct Authority will help her case but she is running out of time.
She said: ‘The police have said I am a victim of crime but the banks are refusing to treat me like one.
‘The code these banks have created and signed up to says they should support victims of crime, but where is the support? I am going to be left bankrupt and I am being chased every day for money I don’t have.
The alleged Ukranian building site that the conman said he was working from. He promised to repay all the money Ms Elwell had sent him once he returned to the UK
‘I have reported the banks for financial misconduct for their failings towards victims of crime.’
Ms Elwell first started speaking to the man, who said they lived in nearby Coventry, on January 1, after he contacting her on Facebook’s dating app.
The pair planned to meet up after the Covid-19 lockdown period, but the crook was whisked away to Ukraine to complete an engineering contract they had secured with the UK government.
By Tuesday January 19, the conman told Ms Elwell the engineering contract had been forcibly stopped and his equipment seized.
The fraudster said they would cover the costs of covering this unforeseen circumstance, but asked Ms Elwell to send £250 to pay for food and taxis.
After pondering the request for two days, she eventually gave in and transferred the money, explaining it seemed ‘such a small amount of money at the time’.
But the fraudster didn’t stop there, and doubled down on the story, claiming they were held captive in a Ukrainian cellar by loan sharks.
The scammer called Ms Elwell, crying down the phone and begging for her help.
Ms Elwell was forwarded documents allegedly from the Ministry of Finance of Ukraine, explaining her love interest owed £102,940.
Feeling like the only person who could save him, she said the pressure she was under at the time ‘felt as if I had a gun to my head’.
After speaking with her family, she then sent the con artist £7,500 from her own savings and secured a bank loan, transferring him £22,940 on February, 4.
She secured a further £12,000 loan and forwarded it the following day.
After sending a further £45,000 from a third loan and her second credit card on March 5, it appeared the man had been saved and would be flying home.
He was due to fly back on March 16, but a supposed email from Heathrow Airport officials said he had been arrested.
Ms Elwell described the pictures her scammer sent as showing an ‘attractive’ and ‘intelligent’ man, after the pair struck up an immediate connection on Facebook’s dating app
The export manager was sent ‘official’ documents and told that her love interest owed tens of thousands of pounds after being held captive by loan sharks in Ukraine
While waiting four hours at the airport, Border Force pulled Ms Elwell aside and explained it was probably all a scam.
She even went to his supposed address in Coventry, but soon discovered no-one by that name lived there.
A spokesperson for Santander said: ‘We have the utmost sympathy for Ms Elwell and all those who fall victim to the criminals who carry out these scams.
‘Unfortunately, despite repeatedly warning her of the dangers of transferring money to someone she hadn’t met and directly raising our concerns that this was a scam with Ms Elwell and the police, she confirmed she wanted to proceed with the payments.’
A spokeswoman for HSBC said: ‘Protecting customers from fraud is an absolute priority for us and we are sorry to hear that Ms Elwell has been the victim of an authorised push payment scam.
‘We work hard to deliver on our commitments under the CRM Code, helping protect as well as support customers should they fall victim to scammers. We act with empathy and understanding when investigating a case and we work hard to ensure fair and reasonable outcomes for our customers.
‘Whilst we have an experienced team looking for signs of fraud, customers can also help themselves by taking note of fraud warnings when making payments and following the advice given.
‘Romance scams are one of the most common types of fraud. Criminals exploit the emotions of their victims to build up a relationship, often via social media or dating sites, and then request money.’
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