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Scam victims being treated ‘appallingly’ by banks

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Many victims of bank transfer fraud are treated “appallingly” when they try to get their money back, according to Which?

The consumer group said banks need to do more to protect customers and provide victims with fair reimbursement.

A voluntary code signed by most banks, ensuring victims get their money back, has repeatedly failed to protect consumers, Which? said.

Losses to bank transfer – also known as authorised push payment (APP) – fraud soared to £479m in 2020.

However, reimbursement rates remain shockingly low, Which? said.

Financial Ombudsman Service (FOS) data also indicates 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.

An investigation by Which? shows how some victims are being completely abandoned by their banks.

One First Direct customer was denied full reimbursement for his £180,000 losses to an investment scam because he did not check online reviews. This is despite the trading platform he used having nearly as many excellent ratings as bad on Trustpilot at the time of the scam.

The platform he invested with – Grandefex – is now subject to a Financial Conduct Authority (FCA) scam warning, but this came long after he invested.

To make matters worse, First Direct took more than 35 days to reach a decision and during this time failed to warn the victim that he was at risk of identity fraud because the scammers had copies of his passport and recent bills.

Which? advised him to take his case to the Financial Ombudsman Service (FOS).

Jenny Ross, money editor at Which?, 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.”

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