Fraud victims left exposed by banks, says Which?

The consumer champion says this leaves consumers feeling abandoned at a time of crisis and exposed to future scam attempts. It also found that some customers struggled to contact their bank after they had been a victim of a scam.

In a survey of more than 400 people who had been victims of fraud or attempted fraud in the last 12 months, it found that 83% said they were satisfied overall with how their bank managed the incident. According to Which?, it still leaves a significant number of victims potentially getting substandard treatment, considering the Office for National Statistics estimates that for the year ending March 2021 there were 4.6 million fraud offences.

Of those who reported fraud to their bank through their phone or webchat, 15% said they waited 30 minutes or more to speak to someone. This is a concerning amount of time in what will often be an emergency and, in extreme cases, could cost thousands of pounds.

It also found that 32% of victims said their bank did not offer advice or resources to help them better protect themselves in the future. This comes amid growing concerns over “recovery fraud” - where victims are scammed again by fraudsters pretending to help them recoup their losses - going up by 39% since last year, with victims losing on average £14,408.

Commenting on the news, Which?’s money editor Jenny Ross, said: “Fraud can have a devastating impact on victims. 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.

“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.”

Which? contacted banks representing 98% of the customers surveyed to ask them what protocols they had in place for fraud victims, with all of them saying they offer advice or guidance in some form or other. However, the findings of its survey highlight concerns about whether this information is reaching consumers.

Entitlement to a refund depends on the type of fraud that a person falls victim to, for example in the case of unauthorised fraud, your debit or credit card provider must refund. However, if you were tricked into sending money to a scammer there is no such legal protection against losses.

In order to counteract this problem, most major banks have signed up to a voluntary reimbursement code on bank transfer scams. This not only instructs companies to reimburse customers who are not at fault, but also to provide them with adequate support.

Firms signed up to the code have however been criticised for how they are providing support to customers, with a recent report by the Lending Standards Board (LSB) finding some businesses were failing to meet the requirements of providing a response on reimbursement claims within 15 days, or 35 days in “exceptional circumstances”.

In addition to this, the LSB said there was little evidence in these cases of firms providing any updates to the customer about the delay and when they could expect a decision. As such Which? is calling for the voluntary code on bank transfer scams to be replaced with a mandatory reimbursement scheme. This includes stronger protections against bank transfer fraud for consumers, and tough enforcement against companies that break the rules.

In order to achieve this, Which? says the government should grant the Payments System Regulator the powers it needs to make changes through the Faster Payments system.

As the information about how banks handle cases of bank transfer fraud is currently anonymous, Which? is also calling for the regulator to introduce greater transparency so customers can clearly see how their bank chooses to treat victims of crime.