Blameless fraud victims were handed back £41.3million by banks in the second half of last year, new figures reveal, as the percentage winning back some money doubled.
But in a sign of the mounting risk to people’s finances losses to bank transfer and impersonation scams rose 29 per cent last year to £455.8million.
The introduction of a new code at the end of May 2019 was supposed to better protect people from fraud, as well as make it easier for them to get their money back if the scam was not their fault.
This is Money has been campaigning for more than five years for better protection for fraud victims.
Authorised push payment scams often take place when victims are called by fraudsters pretending to be from their bank, or the police
But while 41 per cent of the £101.1million in losses assessed under the code was handed back to victims from 50,311 fraud cases, up from 19 per cent six months earlier, the total sum lost to transfer scams continued to rise.
These are scams where victims transfer money directly to fraudsters, rather than have their accounts taken over, usually after being tricked into thinking they are talking to their bank or the police.
And despite the introduction of an automated push payment (APP) scam code in May, which the UK’s five biggest banks all signed up to, losses to such fraud actually increased in the second half of last year to £248.3million.
By comparison, some £207.5million was lost to APP fraud in the first six months of 2019, and £206.1million in the final six months of the previous year.
One expert called for ‘hard hitting’ fraud warnings to be shown ‘regularly on prime time TV’ to get the message across to consumers.
Trade body UK Finance, which collected the figures, said losses ‘continue to be driven by the abuse of online platforms used by criminals to scam their victims.
‘These include investment scams advertised on search engines and social media, romance scams committed via online dating platforms and purchase scams promoted through auction websites.’
Losses to authorised push payment scams – where victims transfer money to fraudsters – rose more than £100m in 2019 compared to the year before
UK Finance’s managing director of economic crime Katy Worobec said: ‘Criminal gangs are continuing to exploit online platforms to target customers directly and trick them into handing over their money or information.
‘This shows why fraud and other economic crime should be included within the new regulatory framework for online harms, to ensure all sectors play their part in tackling the threat posed by fraud to our society.
Criminal gangs are continuing to exploit online platforms to target customers directly
Katy Worobec, fraud expert
‘Only by working in partnership with the public sector and other industries can we protect innocent victims and prevent money getting into the hands of criminals.’
Perhaps the only silver lining for fraud victims is that they are more likely to be handed back their money.
Total reimbursements – including ones not assessed under the new code – grew 40 per cent year on year in 2019 to £116million, while victims who lost ‘life-changing sums’ of £10,000 or more were especially likely to get their money back under the new APP scams code.
But a new fraud code has at least helped more victims win money back, with those who lost more than £10,000 especially likely to get their money back
According to the figures, £23.1million lost in scam cases involving these sums assessed using the code was handed back to victims. With £54.2million in total lost in assessed cases, that means 42 per cent of losses were reimbursed in the second half of last year.
But three-quarters of scams referred to the code involved sums of less than £1,000, with 30 per cent of the £11.3million lost in those nearly 38,000 cases handed back to victims.
Moneycomms founder Andrew Hagger called for fraud warnings to be shown regularly on prime-time TV
The code states that victims of an APP scam ‘should’ be reimbursed, unless they ignored warnings from their bank, did not have a basis to believe who they were paying was who they said they were, or were grossly negligent.
The signatories to the Code are Barclays, the Co-op Bank, HSBC, Lloyds, NatWest, Nationwide Building Society, Santander and Starling.
Metro Bank has also signed up but has come under fire for saying it will not introduce an anti-fraud measure known as Confirmation of Payee.
This is designed to better protect people from these bank transfer scams and is a key plank of the code, but the bank said it was not required to introduce it.
Andrew Hagger, founder of personal finance site Moneycomms, said: ‘Despite the activity the industry has undertaken so far, it is not making any indent in the level of financial losses experienced by customers.
‘Maybe customer warnings and messaging need a complete rethink and moving up a level; it needs to be hard hitting and shown regularly on prime-time TV to help get the message across.
‘A voluntary code has seen some customers reimbursed but it seems fraudsters continue to hold the upper hand and banks are struggling to keep the level of fraudulent losses in check.’
The operator of the code said in a statement: ‘The introduction of the Contingent Reimbursement Model Code in May 2019 marked a major milestone in delivering increased protection for consumers.
‘The Lending Standards Board took over governance of the code in July 2019, and has since continued to engage with signatory firms to ensure that the requirements are adhered to.
The LSB is also actively working with firms to increase the number of signatories to the code.
‘We have recently conducted a themed review of how signatory firms are applying one element of the code – a customer’s reasonable basis for belief that the relevant transaction was legitimate.
‘Individual reports have been issued and where relevant, highlight improvements necessary to meet the obligations of the code. In addition we convened a workshop in January with a number of firms to highlight our initial findings.
‘Our summary report is due to be published shortly, followed by a full review of the code later this year.’
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