Today Which? is making the first super-complaint to the financial regulators calling on them to ensure banks better protect customers who are tricked into transferring money to a fraudster.
UK consumers now make over 70 million bank transfers a month, compared to just over 100 million in a whole year a decade ago. However protections have not kept up, and victims conned into transferring money by bank transfer to a scammer currently have no legal right to get their money back from their bank, unlike with many other payment methods.
New Which? research found that six in 10 people (60%) didn’t realise they had no consumer protection from their bank if they are scammed into making a bank transfer. Eight in ten people (84%) said they had used bank transfers to make payments and one in 10 (9%) had, or knew someone that had, made a bank transfer payment to a fraudster’s account.
As scams become ever-more sophisticated, consumers can only protect themselves so far. People cannot be expected to detect complex scams pressuring them to transfer money immediately or look-alike bills from their solicitor or builder. Banks have developed and invested in security checks and systems to detect and prevent fraud where they are liable to reimburse the victim, for example for credit card scams. However there aren’t sufficient checks if someone is tricked into transferring money directly to another person’s account.
Which? thinks banks should shoulder more responsibility for money lost to scams made by bank transfer, just as they reimburse customers who lose money due to scams via direct debit or credit and debit cards or fraudulent account activity. Banks will then have an incentive to use technology and information in ways that consumers simply cannot, to develop better mechanisms to prevent the fraud in the first place.
Using its legal powers, Which? is making a super-complaint to the Payment Systems Regulator and alerting the Financial Conduct Authority. The regulators now have 90 days to investigate and respond to Which?’s concerns.
We want the regulators to:
Formally investigate the scale of bank transfer fraud and how much it is costing consumers;
Take action and propose new measures and greater liability for banks to ensure consumers are better protected when they have been tricked into making a bank transfer.
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.”
– ENDS –
Notes to Editors:
A super-complaint allows designated consumer bodies to complain to regulatory bodies, including sector regulators, about market features that are significantly harming consumers interests. Which? is a designated representative body under section 68(1) of the Financial Services (Banking Reform) Act 2013, allowing us to make a complaint to the PSR.
Which? has submitted this super-complaint to the Payment Systems Regulator and alerted the Financial Conduct Authority.
Current legislation gives consumers much better protection when scammers seek to secure funds through other payment routes. If a consumer authorises a payment to a scammer using a credit card they are likely to be able to recover lost funds from their bank under Section 75 of the Consumer Credit Act. If they have been tricked into providing their banking security details, and the scammer has used those details to make an unauthorised transfer of funds, then the consumer is likely to retrieve the lost funds from their bank under the Payment Services Regulations 2009 (PSRs). These rights are subject to certain limits.
Methodology: Populus on behalf of Which? surveyed 2058 UK adults between 9th and 11th Sept 2016 on the knowledge of consumer protection when making payments to a scammer and who should be held responsible. Data was weighted to be demographically representative.
Methodology: Populus on behalf of Which? asked 2089 respondents on the 7th and 8th September 2016 if they, or anyone they know, ever made a bank transfer payment which was paid into a fraudulent account. One in ten (9%) responded either saying that they had themselves or know someone that has made a bank transfer into a fraudulent account.
Advice clinic: Consumers looking for advice on how to spot a scam, can visit Which? experts at our advice clinic at King’s Cross station on Friday 23rd September, from 9am. Which?’s Consumer Rights site provides free guides for people on how to spot a scam or claim money back: http://www.which.co.uk/consumer-rights/scams
There were 71 million Single Immediate Payments by FPS in July 2016 (excludes 16 million forward dated payments). There were 108 million remote banking direct credit payments by Bacs in 2006.
Which? is encouraging members of the public to sign its ‘Safeguard Us from Scams’ petition to support the super-complaint, which has had over 181,000 signatures.
Please contact the Press Office if you would like to speak to one of our case studies.
Case study: A holiday lettings customer booked an apartment in Paris. He enquired about the apartment and the owner confirmed it was available for the dates he was visiting. He then received an email with the lettings agency branding asking for the payment to be sent via a bank transfer including the account details and sort code. The customer transferred the money from his account and received a confirmation from the owner. Soon after the property was taken down from the listings. The customer contacted the lettings agency who confirmed that the booking reference was invalid and that they were unable to help further. The customer was unable to retrieve any of the money he paid.
Case study: Fraudsters claiming to be from a UK bank convinced a customer that their account had been compromised and to transfer £17,500 savings to another account, set up in their name. Within minutes the customer realised they had been tricked and contacted their bank, to be told the money had gone and the customer should contact the receiving bank. The bank investigated and said the fraudsters had cleared the account and that they were unable to trace the funds. The bank then offered to refund the 10p the fraudsters had left behind.