Banks failing to properly help victims of fraud, says Which?

·3 min read
<span>Photograph: Tim Goode/PA</span>
Photograph: Tim Goode/PA

The UK’s biggest banks are failing to properly help fraud victims, leaving them “feeling abandoned at a time of crisis and exposed to future scams”, the consumer group Which? has claimed.

Which? found that customers often struggled to contact their bank after they had been a victim of a scam, including one HSBC customer who waited a total of seven hours on hold and racked up a £50 phone bill.

It surveyed more than 400 people who had been the victims of a fraud – or attempted fraud – in the last 12 months and found that 17% were unsatisfied with how their bank had managed the incident.

The Office for National Statistics has estimated that for the year ending March 2021 there were 4.6m fraud offences, meaning a significant number of people were left to fall between the cracks, Which? has warned.

It has previously estimated that £700,000 is being lost to bank transfer scams every day, which works out at £491 a minute.

Of the people who reported fraud to their bank via phone or webchat, 15% said that they had waited 30 minutes or more to speak to someone. In extreme cases, such delays can cost thousands of pounds as fraudsters are able to empty accounts, unchecked.

Which? found that almost a third of fraud victims said that their bank had failed to offer advice or resources to help them better protect themselves in the future.

The figures come amid growing concerns over “recovery fraud” – where victims are scammed again by fraudsters pretending to help them recoup their losses. This type of fraud has seen a 39% increase since last year, with victims losing £14,408 on average.

Jenny Ross, Which? Money editor, said: “Fraud can have a devastating impact on victims. When banks fail to offer proper support, it can make a nightmare situation even worse, and an absence of information from firms about how people can protect themselves could even lead to ruthless scammers striking for a second time.”

She said the entitlement to a refund depended on the type of fraud that a person fell victim to.

In the case of unauthorised fraud – where money is taken from an account without permission (for example, the card is stolen and used to make online purchases) – the debit or credit card provider must refund the victim unless it can prove that they have been grossly negligent or acted fraudulently.

But for those tricked into sending money to a scammer – known as authorised push payment (APP) fraud or bank transfer fraud – there is no such legal protection against losses, she said.

While most major banks have signed up to a voluntary reimbursement code on bank transfer scams, many customers are not refunded, or are offered 50% of their money back with decisions made on an ad-hoc basis.

Which? has called for the voluntary code on bank transfer scams to be replaced with a mandatory reimbursement scheme, which would include stronger protections against bank transfer fraud for consumers, and tough enforcement against firms that break the rules.

A spokesperson for UK Finance, which represents the banks, said: “A total of £188.3m has been reimbursed to thousands of customers since the … voluntary code was introduced in May 2019.

“However, we agree that more needs to be done and we firmly believe that a regulated code, backed by legislation, is the most effective answer so that consumer protections apply consistently across the banking industry. At the same time, it’s vital that the government and regulators acknowledge how vulnerabilities in other sectors such as telecoms and online platforms are facilitating these crimes and consider an overall strategy to protect consumers from fraud.”

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