A voluntary code introduced in May 2019 saw banks commit to reimburse victims of Authorised Push Payment (APP) scams, where consumers are tricked into transferring money to a seemingly genuine account.

In a ‘no-blame’ scenario where both the provider and customer have taken necessary steps to prevent fraud, banks should refund the money. To date, nine firms have signed up.

However, campaign group Which? said it has heard from a number of victims who claim they’ve been unfairly denied reimbursement.

In one case, a 38-year-old woman lost almost £33,000 after responding to a text message about a ‘suspicious payment to Airbnb’. It appeared to come from Lloyds Bank’s usual phone number, sandwiched between two genuine messages, so she called the number supplied. She was persuaded to transfer money to a new account.

Lloyds sympathised but wouldn’t reimburse her on the grounds that she ‘did not take sufficient steps to verify that either the text message or the person she spoke to on the phone were genuine’. It added that she authorised the payment despite receiving warnings.

Banks hiding behind fraud warnings

Which? said a trend is emerging of banks relying on fraud warnings when transferring money to justify not refunding customers.

But its survey found almost half (49%) of people aren’t 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”.

It worked with leading academics to analyse the effectiveness of banks’ fraud warnings and concerns were raised over ‘generic’ messages displayed by First Direct, HSBC, Lloyds, NatWest and Royal Bank of Scotland which customers were likely to ignore.

For others, the warnings come too late. Instead, banks should use targeting and personalisation to make warnings more persuasive.

Which? said it supports the introduction of fraud warnings but they need to be fit for purpose and shouldn’t be used as a means to deny refunding people of their lost savings. It also wants to the code to be made mandatory for all current account providers as a number of banks are yet to sign up.

‘Online warnings must be up to scrtch’

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.”