Bank scam victims are left out of pocket as firms don't pay refunds

It’s a lottery: Victims of bank scams are being left thousands of pounds out of pocket as firms try to wriggle out of paying refunds, consumer group warns

  • Banks are meant to refund fraud victims under rules introduced in May last year
  • Which? warns banks regularly blame customers for missing warning signs
  • Fewer than half of fraud victims – 41 per cent – are getting their money back

Blameless victims of sophisticated bank scams are being left thousands of pounds out of pocket because of a refund ‘lottery’.

Under rules which were introduced in May last year, banks are meant to refund fraud victims who have taken reasonable care to protect themselves.

Yet firms continue to wriggle out of paying refunds and treat customers ‘unfairly or inconsistently’, according to Which?

Sam and Dave Pentin, pictured, were conned out of £14,200 by a fraudster who posed as their solicitor. They called their bank, Lloyds, after realising they’d been scammed but five months on they had not had a refund

The consumer champion warned that banks regularly blamed customers for missing warnings and not doing enough to realise they were being scammed.

The refund scheme was introduced following a major campaign by this paper. 

It is voluntary, but major banks including Barclays, Co-operative Bank, HSBC, Lloyds Banking Group, Metro Bank, Nationwide, NatWest, Santander and Starling Bank have all signed up.

Yet fewer than half of fraud victims – 41 per cent – are getting their money back, according to the Payment Systems Regulator. 

Victims of highly sophisticated scams, where fraudsters are able to quote financial and personal details and use manipulative tactics, are being denied refunds

In one case, a Lloyds Bank customer is still £33,000 out of pocket after falling victim to a so-called spoofing scam, in which fraudsters call or text from what appears to be a legitimate number.

Which? said she was told by the bank she could not have a refund because she did not take ‘sufficient steps’ to verify the text message or person she spoke to on the phone were genuine.

In another case, Nationwide initially offered only a partial reimbursement to a customer who was scammed out of £4,000 after his builder’s email account was hacked. 

This was despite the bank admitting it had failed to provide adequate warnings to the customer before the payment was made. 

He eventually received a full refund, Which? added.

Which? said banks had unreasonable expectations of the steps customers should have taken to verify a payment was legitimate.

‘We lost 14k in an email con’ 

Sam and Dave Pentin were duped by a fraudster who posed as their solicitor to steal £14,200 they were putting down as a deposit on a property in Penryn, Cornwall.

The Pentins, both 53, received an email from an address that looked like the one belonging to their solicitor, requesting the deposit be paid into an HSBC account. 

Mrs Pentin said: ‘We saw no reason to question who we were communicating with.’

Realising they had been scammed, they called their bank, Lloyds. 

But five months on, they had not had a refund.

After Money Mail intervened, Lloyds refunded the £8,024 it recovered from the HSBC account, and HSBC paid back the rest. 

This means victims of highly sophisticated scams, where fraudsters are able to quote financial and personal details and use manipulative tactics, are being denied refunds. 

Which? added that banks were also not doing enough to protect the vulnerable. 

Under the code, they are required to reimburse vulnerable customers regardless of their actions.

The consumer group heard from one customer who was defrauded out of £20,000 while undergoing extensive medical treatment. 

Santander initially refused reimbursement but the customer later received a refund.

Gareth Shaw, head of money at Which?, said: ‘The scams code is a landmark milestone in the fight against fraud, but our analysis has found clear issues with how banks are meeting its core objective of reimbursing blameless people who have lost money through bank transfer scams.

‘Even as this type of crime continues to surge, the lack of fairness, consistency or transparency across the industry means that the chances of people getting their money back is often a total lottery.

‘A voluntary approach to tackling bank transfer fraud has failed. Banks, regulators and Government must work together to make the code mandatory and ensure that strong standards on reimbursement are introduced.’ 

Katy Worobec of UK Finance, which represents the banking industry, said: ‘We agree that a voluntary agreement alone is not enough, and new legislation is required to address issues of liability and reimbursement.

‘With criminal gangs continuing to target customers, the Government and regulators should consider as a priority how data breaches and vulnerabilities in other sectors such as telecoms and social media are facilitating these crimes, as part of an overall strategy to protect consumers from harm.’ 

1,000 jobs at risk as TSB axes cashiers amid branch closures

By Francesca Washtell City Correspondent 

TSB is scrapping the traditional cashier role in another blow to local banking.

The bank’s 929 cashiers have been told they either need to retrain for a more complex role, take voluntary redundancy or lose their job entirely when the role is phased out in early 2021.

Cashiers perform basic bank transactions such as cashing cheques and helping customers with queries.

TSB is scrapping the traditional cashier role in another blow to local banking

These will still be available in its 500 branches – but TSB wants staff to be able to do more complex roles such as helping customers open accounts or use digital services.

The lender has hammered yet another nail in the cash coffin because it expects fewer customers to use branches for basic transactions – and it cited the Covid-19 pandemic for speeding this up.

Mark Brown, the general secretary of the bank’s staff union TBU, said: ‘TSB was already facing major cost problems and this looks like them jumping on the bandwagon, using the pandemic as an excuse to get rid of these roles. 

They don’t know whether people will return to branches once this pandemic is over.’

TSB’s Spanish parent company Sabadell said it had been looking at ways to speed up cost cuts at the lender, dubbed ‘Totally Shambolic Bank’ in 2018 after a gigantic IT glitch that left 2million customers locked out of their online accounts.

Last November TSB named 82 branches that were due to shut before the end of 2020. TSB will then be left with 454 branches and there are fears that more closures are on the way. 

Over the past five years the UK has lost a third of its bank branches. And accessing banking services has been made even harder by the pandemic, with branches reducing opening hours.

Millions of people – particularly the elderly and vulnerable – rely on bank branches for essential services such as withdrawing cash and paying their bills. 

But a further 247 branches are expected to disappear this year, leaving customers with 35 per cent fewer than they had in 2015.

Critics argue coronavirus has accelerated the ‘death of cash’, with many shops accepting only contactless payments.

A TSB spokesman said: ‘Covid-19 has accelerated the use of digital services. When customers visit our branches, their needs tend to be more complex and we need a fully multi-skilled workforce to meet them.’

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