Which? is concerned by early signs that some of Britain’s biggest banks are refusing to reimburse blameless victims of devastating transfer fraud, despite the introduction of new industry standards intended to protect fraud victims.
Banking customers lose life-changing sums every day through bank transfer scams – with Which? even hearing from a victim who lost £500,000 through his restaurant business.
It was hoped that the introduction of a voluntary industry code in May 2019 would ensure that all blameless victims get their money back, finally reversing the trend of people being left out of pocket.
But Which? has heard from a number of people who say they have been denied reimbursement unfairly – with a worrying trend emerging of banks relying on fraud warnings to justify not refunding customers. These decisions from banks fly in the face of the voluntary code most banks have signed up to, which pledges to reimburse all blameless victims.
It is now much more common for online or mobile banking customers to see fraud warnings when transferring money, as banks seek to meet new code standards by introducing a range of different features aimed at making a customer think twice about whether they are being scammed.
However, a Which? survey found that almost half (49%) of people are not even aware that new fraud warnings had been introduced by banks – further evidence that victims should not be arbitrarily turned down for reimbursement because they have “ignored warnings”.
Which? – working with two leading academics – also analysed the effectiveness of banks’ fraud warnings, to establish whether they are adequately ‘understandable, clear, impactful, timely and specific’ – as set out in the code. The experts raised concerns about elements of the warnings from some of Britain’s biggest banks.
One researcher voiced concerns over the ‘generic’ messages displayed by First Direct, HSBC, Lloyds, Natwest and Royal Bank of Scotland. Petko Kusev, from Huddersfield Business School, said that it was perfectly rational for customers to ignore generic information when conducting bank transfers.
A second researcher, Patrick Fagan from Goldsmiths University, suggested that some warnings can come too late, as once people have already been targeted by scammers they typically commit to seeing the action through. Mr Fagan suggested that banks use targeting and personalisation to make these warnings more persuasive.
Which? supports the introduction of fraud warnings as an important defence in preventing scams. However, Which? believes that banks must prove their fraud warnings are fit for purpose and should not be used as a means to simply deny reimbursing blameless victims. If a bank can’t prove its warnings are effective then the customer should not be deemed at fault.
The consumer champion also wants the industry code to be made mandatory for all current account providers as many providers still haven’t signed up to the vital fraud protections.
Jenny Ross, Which? Money Editor, said:
“People are losing life-changing sums of money every day to devastating bank transfer fraud – so it’s shocking that some current account providers still haven’t signed up to offer their customers vital protections.
“All banks must prove that their online warnings are up to scratch – especially if they are denying victims reimbursement, as we’ve seen in some cases.”
