Take banks to court for abet­ting crime, fraud vic­tims told

The Daily Telegraph - Your Money - - FRONT PAGE -

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.

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