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Millions still vulnerable to bank transfer scams

Emma Lunn
Written By:
Emma Lunn

Some of the UK’s major banks have been criticised for failing to sign up to a voluntary code which helps victims of authorised push payment fraud.

Millions of people remain at risk of losing life-changing sums of money to bank transfer scams because nearly half of banks and building societies won’t commit to helping refund victims, according to Which?

Bank transfer or “authorised push payment” fraud cost consumers £228.4m last year. Authorised push payment fraud is where someone tricks you into sending them money from your account. They often do this by contacting you via phone, email or social media and pretending to be someone else – such as your bank, a contractor, a conveyancing solicitor, or the police.

A voluntary industry code to protect consumers from this type of fraud came into effect on 28 May. The code offers increased protection from scammers, including reimbursement to blameless victims.

But Which? found that 12 of the 27 main banks and building societies in the UK have not yet signed up to the code.

Nine of the providers Which? questioned – Bank of Ireland, Citibank, Clydesdale Bank, Monzo, Post Office Money, Tesco Bank, Co-Operative Bank, Virgin Money, and Yorkshire Bank – say they are working to become a signatory to the code but none gave a definitive date.

Danske Bank, First Trust Bank and N26 told Which? they are assessing what becoming a signatory to the code involves.

In contrast, TSB has gone beyond the requirements of the code by introducing its fraud guarantee, which promises to refund any innocent victim of a scam.

Last year, only £42.3m of the money lost to these scams was returned – less than a fifth of the total – meaning countless victims were left out of pocket.

Which? is calling for all banks to urgently sign up to the voluntary code of good practice to reassure their customers they will be protected from these types of scams.

Jenny Ross, Which? money editor, said: “People’s lives are being derailed every day as life-changing sums of money are lost to bank transfer fraud, so it’s incredibly concerning to see so many banks not yet signed up to this vital code.

“If the code is to deliver results for victims of fraud, all providers need to now urgently work towards implementing it – any more time wasted could result in millions more being lost as a result of this devastating crime.”

Nick Chadbourne, CEO of conveyancing service LMS, said: “The Which? report shows that current fraud protections can prove inadequate in assisting in dealing with the increasingly complex threats consumers now face.

“According to the FCA, £350m was lost in ‘push payment frauds’ in 2018. Bank transfer fraud is one area of serious risk to the home buying process, particularly in respect of customers paying their own house deposits.”

Under rules set by the Payment Systems Regulator, banks must implement Confirmation of Payee schemes by the end of March 2020. Under the new scheme, anyone setting up a bank payment will be alerted if the name on the recipient account does not match, is incorrect or misspelt, meaning it can be corrected before a payment is made.