Banks agree to compensate victims of sophisticated fraud

Some of the UK’s biggest banks have agreed to pay compensation to victims of bank transfer scams.

Until this new compensation scheme was announced this week, banks have refused to pay compensation if neither they nor the customer were to blame.

Victims of bank transfer scams have been left with nowhere to turn, when banks have refused their requests for refunds. And figures released in 2018, showed that consumers lost £92.9 million because of this type of fraud.

But now a group of bank’s including Barclays, HSBC. Lloyds and RBS, has agreed to contribute to a fund to ensure victims are not left out of pocket. Under current rules, when payments are fraudulently made without customers’ authorisation, banks are generally obliged to give a refund. But when someone has been tricked into making a payment themselves, in what’s known as an authorised push payment (APP) scam, banks aren’t obliged to give a refund.

Stephen Jones, Head of trade body UK Finance, told the Treasury Committee that the scheme would be an interim measure until a more permanent solution is reached. He said: “If a customer has done what they are required to do, they will be reimbursed. If we look at the 2018 data, assuming that 2019 is the same, we think the banks will probably be reimbursing somewhere between £30 million and £40 million more out of the authorised push payment victim pool as a result of the code in “no Blame” scenarios”.

What is bank transfer fraud?

 A bank transfer fraud, also known as Authorised Push Payment fraud, occurs when someone transfers money from their own bank account to one belonging to a criminal. Experts believe the money is then transferred and filtered through numerous other accounts, often abroad. Unlike credit card scams, victims are not entitled to the same level of protection.

Scammers will use every resource at their disposal, from information that’s publicly available on the internet, as well as more underhand tactics. They often target the more vulnerable people in society, such as those who live alone and who are isolated. However, it is not just the vulnerable being targeted in bank transfer scams, fraudsters have become increasingly sophisticated, and because of this, more and more people are falling victim. This is because of their ability to hack into the public’s personal information and banking history, the scammer can pose as a member of their bank and easily obtain the information they require to steal funds from any account.

How to spot a bank transfer scam:

Don’t just assume that someone calling you out of the blue claiming to be from your bank is a genuine caller. Fraudsters have the ability to spoof calls, meaning they can display the genuine banks telephone number when calling you. Remember that just because someone knows your personal details, like your name and address or mother’s maiden name, does not mean they are genuine.

A bank or other trusted organisation like HMRC or the police, will never ask you for your full PIN number or password. Neither will they ask you to transfer money to a safe account.

Always question uninvited approaches asking for information. If you are concerned, contact the company directly using a trusted email or phone number to check the caller is genuinely from where they say.

Never click on the links provided in an unexpected email or text, this could lead to malware being downloaded on your devise and all your personal information being stolen.