Simoney KyriakouApr 12 2021

Fraud victim? Too bad

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No longer.

Banks will not give your clients their full amount back. Some clients might get nothing at all.

Let me repeat that: if you or your client become a victim of fraud, and you inform the bank, you will go through the expected investigation process.

But in the majority of case outcomes I've seen this year, the answer will be: "Sorry, computer says 'no'. We offered enough scam warnings; it's your fault you transferred the money out. Therefore we cannot refund you."

Victims of authorised push payment and similar scams must now prove they were completely unaware of any scams out there; that they had no scam warnings from their banks while making the transfer; and that if they did, they were completely misled by the scammer into ignoring them.

All this, of course, is nigh impossible to prove.

Last year, FTAdviser reported on cases of victims who received their money back after contacting their banks.

I personally helped them with template letters from Which? and Citizens Advice, and told them how to compose letters to various banks' complaints departments.

I am alarmed at the way in which many banks appear to turn their backs on some long-standing customers at this difficult time.

Last year, banks were urged to show forbearance by the City watchdog. Perhaps this helped those victims get their full money back.

But now there is little to no forbearance. Banks are fighting back against fraud, not only by putting scam warnings everywhere – like gruesome pictures on a cigarette packet – but they also appear to have resurrected 'caveat emptor'.

Did you think caveat emptor was gone?

Nope, the old trope was just lying dormant, waiting for banks to shore up their balance sheets by reining back payouts to their clients. 

Over the past year, I have received dozens of emails from consumers who have been the victims of APP scams. I would say I get two or three a week.

Each time I have helped them compose letters, directed them to templates and information online, and guided their hands as they put together their complaints.

But recently I've had them returning to me, saying the banks have said no.

An 86-year-old widower tricked by a clever multiple-stage investment scam. A 72-year-old lady going through a divorce while caring for a relative, and falling for fraud while at a vulnerable time in her life.

A young woman frightened that her entire savings was being targeted. A man who had been a customer with HSBC for 18 years and found his Help-to-Buy Isa raided by thieves. 

All these have been victims of push scams – and have been told, more or less, that they ought to have known better. 

They were told "there were adequate warnings over transferring to new accounts". I've seen a warning screenshot. Yes, this is true.

But it is also true that when you are on the phone to a scammer, who comes across as calm, reassuring, knowledgeable, knowing details about you that only your bank would know (or so you think), it is easy to fall for the line: "That's just a standard warning, we can override this by doing XYZ."

Fraud warnings

The Financial Conduct Authority earlier this year said that 27m Britons could be classed as vulnerable. Last year it urged banks to show forbearance to people as everyone was affected by Covid-19 in one way or another.

The National Fraud Intelligence Bureau at the City of London Police has revealed that more than £373m was lost by repeat victims of fraud in the financial year 2019-20, with the average repeat victim losing £21,121.

I have a lot of sympathy for the 'caveat emptor' philosophy: sometimes you learn by being burned. But it's a horrible way to teach someone a lesson.

Amid all the fear and panic and economic turmoil and isolation, one would have expected banks to behave as they did before – that is, accepting that the onus was not on the consumer to prove they should have known better. 

But that has all turned on its head. Now they are only paying out in exceptional circumstances.

It is heartbreaking to hear the stories of the people I've come into contact with, being told they will get nothing, or only half of what they had worked so hard to build up.

Now the banks are businesses. They are not the Salvation Army and they cannot be expected to pay out at the drop of a hat. 

If they did, this would be negligent and to the eventual detriment of all their customers. And I have a lot of sympathy for the 'caveat emptor' philosophy: sometimes you learn by being burned. But it is a horrible way to teach someone a lesson.

After all, you'd stop your child from putting their hand in a burning flame, rather than let them learn for themselves that fire will damage them, wouldn't you?

I also accept that banks have been working hard to highlight fraud and to help customers take steps to protect themselves against it.

You'd stop your child from putting their hand in a burning flame.

I've witnessed an increase in two-factor authentication and greater technological advances from banks to help keep their customers safe.

But I am alarmed at the way in which many banks appear to use this as an excuse to turn their backs on some long-standing customers at this difficult time.

If I had Jeff Bezos' billions I would help these victims out myself, but I'm only a journalist and we survive on cup-a-soup and noodles.

What I can do – and have been doing – is continuing to advise these consumers about how to complain, what to say, what information to provide, and how to escalate it to the Financial Ombudsman Service. 

I would urge advisers to do the same. Make sure you put proper fraud warnings on your websites and alert your clients to the sort of scams that are known to be out there: the national insurance number scam, or the Royal Mail parcel payment texts. 

And help the fraud victim, without expecting anything in return. It's not rocket science if even I can do it. Sometimes they just need someone they can trust.

Victims need someone to be on their side. Because the fraudsters aren't, the banks don't seem to be, and the government's Department for Culture, Media and Sport doesn't think the loss of £370m and counting qualifies as 'online harm' for the purposes of its online safety bill.

Simoney Kyriakou is senior editor of FTAdviser