Bank transfer fraud victims are getting less than half their money back in compensation

13 January 2020

Since the introduction of a voluntary code last year,  victims of fraud only get  an average of 48% of their money back


Authorised push payment (APP) fraud victims are getting less than half of their losses back in compensation from banks following the introduction of a new industry code to protect consumers, according to figures from secure payments provider Shieldpay.

APP scams are where people are duped into authorising a payment into the account of a scammer.

Shieldpay says that victims of APP fraud get back 48% of their money on average. This means victims face a shortfall of £3 billion pounds in compensation received, while 15% get no compensation at all.

In most cases, victims of unauthorised fraud receive a full refund, however, those who have lost money due to APP scams do not receive the same protection.

In the first half of 2019, £207.5 million was stolen from UK bank customers in APP scams, according to figures from UK Finance.

A new industry voluntary code offering consumers protection from APP fraud was introduced in May last year.

Customers of banks that have signed up to the code will be reimbursed for their losses provided they have taken reasonable care.

If the bank and the customer have not followed the requirements of the code, then only some of the money may be repaid.

Banks that have signed up to the voluntary code include Barclays, HSBC, Lloyds Banking Group, Metro Bank, Nationwide, Royal Bank of Scotland, NatWest, Co-op and Santander. TSB has its own fraud refund guarantee which reimburses customers who have been victims of fraud.

However, a number of major providers, including Tesco, Monzo and Virgin Money, have yet to commit.

Peter Janes, CEO and Founder at Shieldpay, says: “The voluntary code introduced last year is a positive step but compensating victims is simply fire-fighting without tackling the source of the problem.

“Fraudsters must be stopped in their tracks and consumers protected against transferring money into accounts which are held by scammers.”

How are fraudsters targeting victims?

Push payment fraudsters are becoming increasingly sophisticated, frequently posing as someone who has been employed by the victim, such as a builder of solicitor.

The criminals then send the victim a fake invoice to get them to send money to a bank account controlled by the fraudster.

Fraudsters use a number of different methods in order to trick unsuspecting victims out of their cash.

Shieldpay says that victims are most likely to be targeted over the phone (27%) and on social networking sites (22%).

Over one in five (21%) victims are contacted in person by door-steppers, 16% by clicking on a fake ad, 15% when making a purchase online and 12% on an online dating site.

Janes says: “Blameless victims of APP fraud are being left thousands of pounds out of pocket while fraudsters continue to let the good times roll. It shouldn’t be this way,

“The industry must do more to protect consumers. Full identity verification and background checks, which raise red flags about a business’s or individual’s history, are the only way to make a dent in the sky-high levels of fraud the country is currently experiencing. The technology exists but it’s the responsibility of the individuals and the payments industry, including online marketplaces and banks, to put it in place.”

What to do if you are a victim of a bank transfer scam

The first thing you should do is contact your bank immediately to report the scam. It should then contact the bank you paid the money to and try to get it back.

If your bank as signed up to the Contingent Reimbursement Model (CRM) Code, and the fraud happened after 28 May 2019, you can try to get your money back.

Under the new voluntary code banks will reimburse customers for their losses provided they have taken reasonable care.

This will depend on whether the victim ignored the bank’s warnings of the scam or was “grossly negligent” when transferring the money.

If you have contacted your bank and you are still unhappy you can then make a complaint to the Financial Ombudsman.

How to avoid bank transfer fraud

A genuine bank or organisation will never contact you out of the blue to ask for your PIN, full password or to move money to another account.

Only give out your personal or financial details to use a service that you have given your consent to, that you trust and that you are expecting to be contacted by.

Don’t be tricked into giving a fraudster access to your personal or financial details. Never automatically click on a link in an unexpected email or text.

Always question uninvited approaches in case it is a scam. If you receive an email asking you to change your payment details make sure you contact the firm or bank directly to check them. Don’t rely on emails as the could be fake.

Never rush a payment as a genuine organisation will be quite happy to wait.

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