Take banks to court for abetting crime, fraud victims told
Banks offer accounts to fraudsters but deny help to their victims: so take them to court, a leading charity tells Amelia Murray
Innocent victims of the growing crime of bank transfer fraud – where money is unwittingly sent to criminals’ accounts – should take the bank involved to court, Britain’s leading anti-fraud charity has said. Transfer fraud is one of the fastestgrowing financial crimes and the sums involved, which can run to hundreds of thousands of pounds, are often life-changing for the victims.
David Clarke, a former detective chief superintendent and director of the Fraud Advisory Panel, has taken the unusual step of encouraging victims to take the recipient bank – the one providing the service to the fraudster – to the small claims court on the grounds that it “facilitated” the crime. Mr Clarke said: “There are so many gaps in the banking systems, and it’s the banks’ innocent customers who pay the price.” He said that in every case of transfer fraud questions should be asked of the recipient bank. “Where someone is defrauded we need to ask if the bank could have prevented it. If the answer is yes, the banks should be viewed as having facilitated the crime.” Mr Clarke’s comments came in response to a groundbreaking case reported by Telegraph Money earlier this week. David Burton, below, a customer of Barclays, was duped into paying £3,400 into a fraudster’s TSB account in 2014. Both banks refused any refund. But, armed with police information that the criminals had opened their TSB account with fake documents – and aided by this paper – Mr Burton was eventually repaid by TSB which admitted it failed to meet its own “strict anti-fraud requirements”. His case follows calls by Your Money, and echoed by other groups including Which?, for banks to do more to help fraud victims – and to detect and prevent criminal activity.
Mr Clarke said the case was significant in terms of helping expose the extent to which banks facilitate fraud, often through “turning a blind eye” to suspicious activity.
If victims bring further cases to court he hopes precedents will be set in which banks are forced to improve procedures.
Currently there is no consumer protection for victims if they are tricked into making a payment to a criminal. Banks issue a blanket insistence that they merely followed instructions.
HSBC could be the first bank to face such action. Another Your Money reader, who wishes to remain anonymous, was duped by an eBay fraudster into transferring £8,500 to an HSBC account as payment for a forklift truck.
The truck failed to appear and when he realised he had been defrauded, the victim contacted his bank, RBS, which
told him it could not help as he had instructed the payment.
Through online searches, the victim discovered that the account he had sent his money to was already associated with suspicious activity. More importantly, HSBC had been warned about the account four days before the fraud took place - and had apparently failed to act.
A credible online organisation which patrols eBay and other sites in search of criminal activity, had alerted the bank and the watchdog, the Financial Conduct Authority, to the account on November 25.
The payment took place on November 29, four days later.
Telegraph Money has seen evidence of the information provided to the bank and the FCA.
HSBC said: “If someone is aware of a scam and provides a tip-off we are extremely grateful for that information, and we will take timely and appropriate action in light of that.
The spokeswoman added that she was “not able to comment on whether we did receive a tip-off, or what action we may have taken in light of information received.”
The victim said he would consider a small claims court action against HSBC on the grounds that it had been alerted to suspicious activity in the account. Bringing such a case would cost around £400.
He said: “A court case would highlight wider problems.”
In another case, a couple in their 70s were duped into making a £65,000 transfer to a fraudster and discovered the suspicious TSB account had been connected to an almost identical scam just weeks before. Initially TSB denied any wrongdoing but after pressure from this newspaper it acknowledged it could have prevented the loss. It has now refunded them.
The FCA said it requires banks to have systems in place to minimise the risk of fraud.