Don’t blame consumers for fraud and scams, banks warned

22 August 2018
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Consumers should only be held responsible for financial loss from scams if they’re guilty of “gross negligence”, according to the Financial Ombudsman Service (FOS).

The financial arbitration service says banks must not automatically assume that their customers are at fault if they have been affected by a scam.

According to the FOS, new technologies with “loopholes” are often to blame for fraudsters’ activities. This means that third parties are responsible for financial losses, which leaves banks reluctant to compensate customers who have lost out.

Data from banking industry trade body UK Finance shows banks prevented nearly £1.5 billion of fraud in 2017. Nevertheless, more than £730 million was still lost by customers.

On Tuesday, Moneywise reported on NatWest’s refusal to help a customer who fell victim to fraud. The customer lost £5,000 through a ‘push-payment scam’, which means a real-time payment was made that was irrevocable. The bank deemed the customer negligent, even though its security systems were breached using very little data.

Caroline Wayman, the chief ombudsman, says: “We often hear from banks that their customers have acted with ‘gross negligence’ – and this means they’re not liable for the money their customer has lost. However, gross negligence is more than just being careless or negligent.

“The evolution of criminals’ methods – in particular, their sophisticated use of technology and manipulative “social engineering” – means it’s an increasingly difficult case to make.”

Ms Wayman says common methods used by scammers include duplicate banking websites or phishing text messages that appear to be from a provider.

In its response to the FOS’s report on fraud and scams, Katy Worobec, managing director of Economic crime at UK Finance, comments: “Banks and building societies take the threat of fraud extremely serious and invest millions in advanced fraud prevention systems to protect customers, stopping £2 out of every £3 of attempted fraud last year. But we know there is more to be done.

“Banks will always make every effort to help a customer recover any stolen funds and the industry has introduced new standards on how banks respond to scam victims.”

Comments

In reply to by anonymous_stub (not verified)

On 30/11/18 I was a victim of a card fraud scam 2 amounts where taken out from my account totalling over £21.000 these where investigated and introduced back in to my account, but the day after these amounts where taken out I had a phone call from BARCLAYS bank stating that they were aware of what had gone on and advised me to move what money I had left ie £4639.90 this I done under there instructions I still have the account to witch they instructed me to transfer my money over to, the next day they rang back and wanted me to transfer my overdraft also, this I did not do thankfully, I have had some paperwork from the Barclay bank stating that they are not responsible and they are not going to re-enburse me my money ,please can I talk to someone and try to get my money back after looking at Caroline Waymans article in the Sunday paper stating the same scenario .Yours Sincerely , John Hunt 07894542524.

In reply to by anonymous_stub (not verified)

The time to retire is when your body tells you it’s had enough ! Back in the nineties they were talking about reducing men’s retirement age in line with women’s witch was 60 at that time .now because of immigration and more drain on our resources we who work have to work longer to support our elites mistakes not has they would tell us it’s our fault for living longer!.BS

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