Simple name check to beat the scammers
Fresh details of banks’ crackdown on transfer fraud – fought for by the Mail
BANKS will finally start making simple checks that could protect customers against scammers after a campaign by the Daily Mail.
Fresh details have been released of an anti-fraud system due to be introduced next summer.
Banks will ensure the payee name and account details match before allowing customers to transfer money. They will then alert customers if they are not paying who they think they are.
It comes after the Mail launched our Stop The Scammers campaign calling for better protection for customers, help to trace stolen money and compensation for victims. More than £145million was lost to so-called push-payment fraud in the first six months of this year, with customers tricked into transferring money to conmen posing as trusted businesses or individuals.
Some people lost their life savings. However, experts yesterday accused banks of ‘dragging their heels’ as the vital security measure will not be rolled out until the middle of 2019. They said that if banks had introduced it years ago they would have been able to prevent a ‘significant’ amount of fraud.
Currently banks do not check to make sure the name customers provide as the payee matches that on the account they send money to. They only check the account number and sort code correlate.
It means that if someone writes HMRC as the payee and the account actually belongs to Joe Bloggs, the payment would still go through. Around a third of the total amount of money lost to bank transfer fraud (£49.3million) was a result of invoice fraud, where scammers pose as solicitors, builders and other tradesmen.
They then claim the bank details the customer needs to transfer the money to have changed. Victims lost an average of £17,262.
Under the new system, known as Confirmation of Payee, there will be three possible outcomes.
If the account name is correct a ‘yes’ message will pop up. If the customer enters a similar but incorrect name, a message will flash up saying ‘No, please check’. If the details do not match at all an alert will flash up that says ‘No, the name is wrong’. Customers will be able to over-ride the system to send payments even if the details do not match but will be strongly advised to check first.
The new system will also help prevent people who make ‘fat finger’ mistakes – accidentally sending money to the wrong account.
Pay.UK, which runs the country’s payment systems, said it would be up to individual banks to decide what the messages and alerts look like. The system is part of a new code of conduct being introduced by the industry to give customers more protection against scams.
The code is voluntary but last month the Payment Systems Regulator said most major banks are expected to sign up.
However, the issue of compensation for fraud has not been addressed. Typically banks refuse to refund victims because they ‘authorised’ the payment.
Gareth Shaw, of consumer group Which?, said: ‘It’s right that banks and building societies have finally been forced to introduce this much-needed check at the point of transfer.
However, customers will wonder why banks have dragged their heels and not implemented this system years ago, as it could have prevented a significant amount of fraud.’
Suzanne Raftery, of scam recovery business Requite Solutions, said: ‘Banks have not been absorbing the loss for these frauds, so there hasn’t been any urgency.’
Paul Horlock of Pay.UK said: ‘Confirmation of Payee will let you check you have the correct name for the person or business you’re paying, giving better protection against certain types of fraud.’
A Payment Systems Regulator spokesman said: ‘This is an important step and we would like to see the banks implement this new protection as quickly as possible.’