Fraud victims ‘abandoned’ by banks

Consumer group Which? has warned that victims of bank transfer scams are being “abandoned” by banks when trying to reclaim stolen money.

Which? says measures like the voluntary reimbursement code have failed to adequately protect consumers and provide reimbursement, saying there is a need for stronger action to support victims.

Losses linked to authorised push payment (APP) fraud hit £479m in 2020 but reimbursement rates remain low, with banks finding victims at least partly responsible for their losses in 77% of cases assessed since the code came into force. Two banks found the customer fully liable in more than nine in 10 decisions.

Financial Ombudsman Service (FOS) data also indicates that banks are getting most of these decisions wrong, with 73 per cent of complaints about APP fraud being upheld in favour of consumers in 2020-21.

This is despite the code clearly stating that victims should be reimbursed unless the firm can establish that their customer did not have a ‘reasonable basis’ for believing the person or organisation they are sending money to is genuine.

The Payment Systems Regulator (PSR) has said that the code is not delivering the outcomes it expected. The PSR is due to make an announcement imminently on how to improve consumer protections against APP fraud – and Which? is calling for strong and urgent action from the regulator to ensure banks do more to protect consumers and treat customers fairly and consistently.

Which?’s new investigation reveals the appalling treatment scam victims are suffering at the hands of their bank.

Jenny Ross, Which? Money Editor, said “Fraud can have a devastating impact on victims, and it is unacceptable for so many to be abandoned when they turn to their bank to try and get their money back. Protections for this type of fraud have to be strengthened.”

“The payments regulator must introduce mandatory and clearer reimbursement requirements for all payment providers, to ensure that customers are treated fairly and consistently when they fall victim to a bank transfer scam. They must work quickly with the government to get the powers they need to deliver this.”