Some people who have been tricked into transferring money to fraudsters would be eligible for compensation under new plans designed to tackle this fast-growing crime.
Banks typically refuse to reimburse victims of bank transfer scams, where people are conned into sending cash to a fraudster’s account, but the Payment Systems Regulator (PSR) is proposing a scheme be set up that would see customers refunded “in certain circumstances”.
During the past few years, fraud in the UK payments industry has soared as criminals develop increasingly sophisticated tactics to steal cash. Criminals have been hacking into the email accounts of builders, solicitors or other tradespeople that the consumer has legitimately employed, then getting them to send large amounts of money to criminal accounts. Some customers have lost tens or even hundreds of thousands of pounds after being duped.
The Guardian has featured a number of these cases, which are also known as “authorised push payment” scams or email intercept fraud. Last month we reported on an Essex couple who lost £120,000 after sending the money to what they thought was their solicitor’s bank account, but which instead went to an account that was systematically emptied of £20,000 in cash every day for the next six days.
New figures show that during the first six months of 2017 alone, more than 19,000 people were targeted, involving a total of more than £100m. The PSR, the economic regulator for the UK payment systems industry, which issued the figures and proposals, said this was a crime that “can have a devastating effect”.
Banks have been accused by victims and consumer groups of not doing enough to protect customers, and the PSR said that a review by the Financial Conduct Authority had found that the banks’ procedures for dealing with these scams were “inconsistent”, while their existing fraud detection systems could not easily detect such frauds.
In September 2016, consumer body Which? lodged a “supercomplaint” with the PSR, saying that victims of the scams did not receive sufficient protection from fraudsters in comparison to the measures put in place for other types of payments.
The PSR said it wanted to set up a “contingent reimbursement model” by the end of September 2018, and was seeking views on it. This would set out the circumstances under which people would get their money back – and which bank or payment organisation should pay. Whether compensation was paid would depend on whether the bank/payment organisation had met required standards, such as measures that help prevent and respond to scams, and whether the victim had taken an appropriate level of care in protecting themselves.
Hannah Nixon, managing director of the PSR, said: “To be successful the model must be pragmatic: consumers will need to be vigilant and protect themselves, but equally we expect banks and payment service providers to uphold best practice – and when they don’t there should be reimbursement.”
Which? said it was “good to see the regulator coming down on the side of consumers”. It added: “If this stops the huge amounts of money lost to bank transfer scams it will be a significant win. To make this a reality, the regulator must now ensure any reimbursement scheme properly compensates victims. Meanwhile, banks must move to quickly put in place better checks and protections to prevent these scams happening in the first place.”
