Banks ‘failing’ to provide fraud support

Some UK banks are failing to offer satisfactory support for fraud victims, according to Which? research.

The consumer organisation found that some customers struggled to contact their bank after they had been a victim of a scam, including one HSBC customer who waited a total of seven hours on hold, racking up a £50 phone bill.

Julie, from Devon, was the victim of a scam attempt, losing £3,900 after fraudsters posed as her bank. Julie spent a total of 7 hours on hold on the phone to her bank.

The process took so long that her landline provider temporarily cut her off. It was four days until Julie’s bank contacted her after she had been scammed to tell her that she would be refunded.

The Office for National Statistics estimates that for the year ending March 2021 there were 4.6 million fraud offences.

A survey of more than 400 people who had been victims of fraud or attempted fraud in the last 12 months, found that 83 per cent said they were satisfied overall with how their bank managed the incident.

But Which? said that this leaves a significant number of victims potentially slipping through the cracks and getting substandard treatment.

Of the people who reported fraud to their bank via phone or webchat, one in seven -15 per cent - said that they waited 30 minutes or more to speak to someone.

The organisation said that this was a concerning amount of time in what will often be an emergency.

The consumer champion also found that a third - 32 per cent - of victims of fraud or attempted fraud said that their bank did not offer advice or resources to help them better protect themselves in the future.

The figures come amid growing concerns over ‘recovery fraud’ – where victims are scammed again by fraudsters pretending to help them recoup their losses. This type of fraud has seen a 39 per cent increase since last year, with victims losing £14,408 on average.

Which? contacted banks representing 98 per cent of the customers surveyed to ask them what protocols they had in place for victims of fraud. All of them said that they offer advice or guidance in some form or other – but the organisation said findings of its survey highlight concerns about whether this information is reaching consumers and how effective it is at preventing scams.

The entitlement to a refund depends on the type of fraud that a person falls victim to. In the case of unauthorised fraud – where money is taken from your account without permission (for example, your card is stolen and used to make online purchases) – your debit or credit card provider must refund you unless they can prove that you’ve been grossly negligent or acted fraudulently.

But if you were tricked into sending money to a scammer – known as authorised push payment (APP) fraud or bank transfer fraud – there is no such legal protection against losses.

Most major banks have signed up to a voluntary reimbursement code on bank transfer scams which not only instructs them to reimburse customers who are not at fault, but also to provide them with adequate support.

However, Which? claimed that firms signed up to the code have been criticised for how they are providing support to customers. A recent report by the Lending Standards Board (LSB) found that some firms were failing to meet the requirements of providing a response on reimbursement claims within 15 days, or 35 days in ‘exceptional circumstances’.

The LSB also said there was little evidence in these cases of firms providing any updates to the customer about the delay and when they could eventually expect a decision.

Which? is calling for the voluntary code on bank transfer scams to be replaced with a mandatory reimbursement scheme, which will include stronger protections against bank transfer fraud for consumers, and tough enforcement against firms that break the rules.

“Fraud can have a devastating impact on victims,” said Jenny Ross, Which? money editor. “When banks fail to offer proper support, it can make a nightmare situation even worse, and an absence of information from firms about how people can protect themselves could even lead to ruthless scammers striking for a second time.”

Ross said that the lack of help provided to some victims of bank transfer scams is

“particularly concerning”, and protections for this type of fraud have to be strengthened.
“The payments regulator must introduce a mandatory reimbursement scheme for all payment providers, to ensure that customers are treated fairly and consistently when applying to get their money back,” she added.

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