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Categorized | Banks, Financial

UK banks urged to do more on scam transfers

Posted on September 23, 2016

Banking payment©Dreamstime

British banks must do more to protect customers from transferring money to scam artists, says a new “super-complaint” to the UK’s payments watchdog.

Which?, the consumer group behind the complaint, said banks had to take responsibility if customers sent money to schemes that turned out to be fraudulent.

    As an example, it said it had seen cases where consumers had booked holiday rentals online and were sent confirmation emails to pay via bank transfer. Soon after the transfer was made, the property disappeared from listings and the customer was left with no way to retrieve any money.

    The Which? complaint to the Payment Systems Regulator, which oversees about £75tn payments a year in the UK, comes as the National Fraud Authority estimates that more than 5m cases cost consumers £9bn each year.

    In 2015, at least £11.5m was lost from holiday booking scams, according to Action Fraud. People lost a total £27m from online dating scams last year. At least £24m was lost from phone scams in 2014.

    The consumer group believes banks should shoulder more responsibility for transfer scams, just as they recompense customers who lose money through direct debits, debit and credit cards, or fraudulent account activity.

    But potential new protection measures would add substantial costs and further weigh on banks, whose margins are being squeezed by low interest rates.

    An increasing number of people use bank transfers as a form of payment, with some 70m transacted a month, compared with 100m over the period of a year a decade ago.

    Six in 10 people did not realise they had no consumer protection from their bank if they are scammed into making a bank transfer, while one in 10 had made a bank transfer payment to a fraudster’s account or knew someone who had, Which? said.

    Alex Neill, director of policy and campaigns at Which? said: “We all now regularly use bank transfers to pay for things but what most of us don’t realise is that if you’re conned into paying out money to a fraudster you stand to lose all of your money, unlike when you use your credit or debit card.

    “With scams on the rise, consumers can only protect themselves so far and we believe that banks must do more to tackle bank transfer fraud and safeguard their customers from scams.”

    The PSR has 90 days to investigate the scale of the problem and respond with potential remedies. The regulator said it would examine the evidence and gather its own “to build a clearer picture of the issue and decide a course of action”.

    The PSR could decide to take enforcement action, launch a market review, refer the issue to another watchdog or decide that no action should be taken.

    Financial Fraud Action, a bank industry body, “Banks take fraud extremely seriously and use advanced security systems which last year stopped £8 in £10 of attempted remote banking fraud.