Shameless banks have mounted a secret lobbying campaign to avoid having to refund victims of fraud.
Watchdogs will spell out tomorrow the steps banks must take to tackle scams costing families £1million a day.
It was hoped the measures would include a proper compensation fund.
However a letter leaked to MoneyMail reveals that banks have told regulators and government officials they should not be made responsible. Figures published yesterday show that around £145million was lost to ‘authorised push payment’ fraud in the first six months of the year. Only £31million was refunded.
Watchdogs are the spell out the steps banks must take to tackle scams costing families £1million a day
Many of the victims were persuaded by fraudsters to transfer cash to another account for safety – only to see it vanish.
‘The banks are shameless,’ said Suzanne Raftery, a former Scotland Yard detective and fraud expert at Requite Solutions. ‘They often don’t care about the devastation these scams cause for people. They care about money.’
Gareth Shaw, of Which? Money, said: ‘It’s two years since we highlighted a real lack of protection for people targeted through no fault of their own – but people are still losing life-changing sums of money every day and action from the banks has been woefully insufficient.
‘The finance industry and regulator must quickly introduce measures to stop these scams from happening in the first place and commit to reimbursing all victims who are not at fault – otherwise they risk further eroding trust in the banking system.’
£31k fraud forced boss to liquidate his cleaning firm
Steven Vallance was forced to liquidate his firm after fraudsters cleared his personal and business accounts of £31,000.
He received a text allegedly from NatWest saying his debit card had been used to buy Amazon goods worth £2,499, a transaction he had not made.
The text appeared in the same chain of messages he had already received from the bank so he saw no reason to doubt it was genuine.
Steve Vallance, 44, with his partner Claire and their 13-month-old daughter Jessica. Mr Vallance is no £31,000 out of pocket after fraudsters targeted him
Mr Vallance called a number in the text and spoke to someone purporting to be from NatWest’s fraud department. He was asked several security questions and was told £2,499 had already left his account but would be refunded.
Mr Vallance, 44, who lives in Essex, was asked to enter his card in his card reader and read out a series of codes to confirm the refund.
After the call, he spoke to his partner Claire who felt uneasy. So he immediately called NatWest using the real number but an automated message said there was a waiting time of up to two hours due to severe weather.
Mr Vallance finally got through on a third number and was told £18,000 had been transferred from his personal account and £13,000 from his business account. The money had been transferred into a Barclays account belonging to a payee he had never heard of. ‘I felt sick. Like I’d ruined our future and that of our baby daughter Jessica,’ he said. He later had to liquidate his commercial cleaning business. ‘The money in the account was for tax I didn’t have enough time to build up again,’ he said.
NatWest said that, while its call waiting times were longer than usual, the payment had already been authorised by the time Mr Vallance called.
A spokesman said: ‘We sympathise with Mr Vallance and appreciate that this has been a very distressing experience for him and his family. We take our responsibilities to preventing scams very seriously and always support the victim of a scam in the recovery of their funds on a best endeavours basis.’
Spoof BT caller duped me out of my savings
Robin Hirst was duped into handing over almost £10,000 to conmen posing as BT engineers.
Mr Hirst and his wife Teresa, 61, of Chelmsford in Essex, received a call from a supposed BT staff member claiming their wi-fi router had been compromised. They were told fraudsters had hacked it and they needed to check their online banking accounts immediately.
Robin Hirst, 66, lost £9,500 and £7,000 belonging to his parents Edwin, 91 and Joan, 90, as a result of the fraudsters
Mr Hirst, 66, went to his laptop to open his internet browser. A similar page to the BT homepage appeared and he was told to click a black box. Fake Santander accounts showed someone had spent £300 at 1am. The scammers offered to resolve the issue but created a fake web page allowing them to control his computer remotely. He lost £9,500 and £7,000 belonging to his parents Edwin, 91 and Joan, 90, because he had Power of Attorney. Santander offered to pay the money back.
If fraud continued at the current rate, banks would be on the hook for an extra £200million of losses this year.
The biggest five, Lloyds, RBS, Barclays, HSBC and Standard Chartered, made profits of £9.3billion between them in the second quarter of the year.
The Mail is campaigning for clearer rules to protect victims, help them to trace their stolen money as well as get access to compensation.
The leaked letter was sent last month by Stephen Jones, chief executive of trade body UK Finance, to a number of officials including Andrew Bailey, who heads the Financial Conduct Authority.
How to avoid being scammed
- Hang up on ALL cold callers.
- If you are worried that your bank really might need to talk to you, put down the phone and call it using the number on the back of your bank card or on its website.
- Use a different telephone from the one the call came in on – fraudsters often remain on the line after people hang up. If you have to use the same phone, wait at least 30 minutes before calling back.
- Remember banks will NEVER ask customers to move money to another account to keep it safe from fraudsters.
- Be suspicious if the caller seems to be in a rush and eager for the transaction to go through quickly.
- Never disclose personal information even if the caller sounds convincing and appears to know personal details.
- Never respond directly to unsolicited emails or texts.
Mr Jones said: ‘I speak for all payment service providers (banks) involved to date when I state that they do not believe they should be required to compensate a consumer for the (presently) unquantifiable ‘residual risk’ to which your letter refers.
‘This is not because they do not wish a consumer who has acted reasonably to be reimbursed in such circumstances.
‘They do. It is because PSPs do not accept they should or could be automatically liable for this risk.’
He claimed it was not right that banks should be ‘financially responsible’ for scams that start with data breaches in other sectors such as telecoms and retail.
He warned that a code of conduct that did not put more onus on the customer might lead to more fraud. It is not known whether the rules will demand better compensation for victims.
The code is the result of eight months of work by banks, charities and consumer rights organisations, which were part of a steering group appointed by the Payment Systems Regulator.
The rules are likely to include giving customers timely warnings if they notice suspicious activity on their account and taking measures to prevent criminals opening accounts in the first place.
The idea is that if banks then fail to meet these minimum standards of care they must refund victims.
The proposed code, which should come into force at the start of next year, will be voluntary but it is expected that most major banks will sign up. It will also include a requirement for customers to take reasonable steps to protect themselves against fraudsters.
If they behave recklessly or negligently banks would not be expected to refund them.
What to do if you think you’re at risk
- Call your bank straight away but only on a number taken from your bank card or its website.
- Tell the call handler that you think you have been scammed and ask for the money to be recalled straight away.
- Do not ask for the fraud team as there may be a queue – the crime can always be investigated later.
- If the money has already gone out of your account, tell the call handler to contact the receiving bank and freeze the money so it cannot be cleared from the account.
- Note the time of the call and any time spent waiting in telephone queues. If there are delays this could be used to support a complaint later.
- Write down everything about the fraud. Ask the bank to explain what happened to the money when it left the account.
However, experts say that most scams these days are so sophisticated that even the smartest of people are at risk of being conned.
But while banks admit that it is right that these victims should be refunded, they refuse to accept this is their responsibility.
Nicky Morgan, the Tory chairman of the Commons Treasury committee, said: ‘As online banking and payments become more prevalent, millions of customers are exposed to the risk of economic crime. As part of the Treasury committee’s inquiry into economic crime, we’ll look at how consumers are affected, and the response of the regulators and financial institutions, including banks.
‘Whilst we all have a responsibility to protect ourselves against fraud, financial institutions also have a role to play in stamping out such criminal behaviour.’
John Mann, Labour MP for Bassetlaw, said: ‘For too long banks have been able to place the blame on intelligent and careful individuals when they are conned by sophisticated fraudsters manipulating the banks’ processes.
‘It is high time the financial services industry faced up to the fact that these people are not wilfully making payments – they are being tricked and the results are devastating.
‘Banks need to face up to the problem and reimburse their customers when they fall victim to scams instead of washing their hands of them. I am in full support of the Daily Mail’s campaign.’
When the code is published the steering group is expected to continue to work together over the next couple of months in a bid to find a solution for a compensation scheme for ‘authorised fraud’ victims.
Spokesmen for UK Finance and the Payment Systems Regulator refused to comment.
Our 6-point manifesto to stop the scammers
1. Follow the stolen money
Criminals bounce stolen money from account to account – often within the same bank – so it becomes ‘lost’.
At present, once money leaves someone’s account it is typically gone for good.
Banks must set up an industry-wide system that enables them to trace where that stolen money goes – to give them a chance of clawing it back.
2. Make banks accountable
If they have not done enough to stop fraudsters opening accounts they use to store stolen funds – for example if scammers have used fake ID – the banks must be responsible for the losses and refund the missing money.
3. Set up fraud hotlines
All banks must have a dedicated fraud hotline that victims can call 24 hours a day / seven days a week.
Currently delays reduce the already small chances of banks being able to claw bank their money.
4. Phone firms must help
Telecom providers should identify and stop scam text messages and calls getting through.
Untold numbers of victims are caught out because the scam message appears within a sting of genuine communications from their bank.
5. Watchdogs with teeth
The Payment Systems Regulator should draw up clear rules on exactly when banks should refund fraud victims – and police these rules strictly.
The Financial Ombudsman should be given more power to investigate fraud regardless of who the customer banks with.
6. Compensate victims
A total of £130million is sitting in frozen bank accounts once used by criminals. With a simple change in the law it could be used to compensate victims.