The Daily Telegraph - Saturday - Money
‘Police blamed Barclays for my £8,200 fraud loss’
Banks have been allowing criminals to open current accounts using just one form of ID, in some cases fake, Telegraph Money has learnt. This has enabled fraudsters to use accounts to rob banks’ other innocent customers. It comes as banks maintain their position that where customers are deceived into transferring cash to fraudsters’ accounts, the banks have no liability.
Diane Astley was the victim of a vehicle scam in early 2014. She learned only this year – following a lengthy police investigation – that the Barclays account she transferred £9,220 into was opened using just an ID card. No secondary document confirming an address, such as a utility bill, was given.
At the time of the initial investigation in 2014, the Metropolitan police told Ms Astley, 59, that they could not find the criminal account holder as he did not live at the address printed on the ID card used to open the account.
Ms Astley was defrauded when she believed that she was buying a motorhome advertised in her local paper in Dumfries, Scotland, in February 2014 and contacted the seller by phone. She left a message and they began to communicate over email.
Ms Astley, who works for the NHS, had bought vehicles online before. But in this case the seller turned out to be a fraudster. After receiving an invoice from a bogus shipping firm, as the van was supposedly coming from France, Ms Astley transferred £8,200 by online bank transfer on February 17.
She mistakenly believed she was covered by debit card protection rules because she had used a card reader she had at home to confirm the payment.
She received a working tracking number and the fraudster then sent another invoice asking for £1,020 to “clear customs”. Ms Astley was told this would be refunded when the vehicle arrived. She queried this and when reassured transferred the money to the same Barclays account.
When she was told the delivery was to be delayed until February 24, she tried to contact the shipping firm but without success. Alarm bells rang and she contacted the police, her own bank (Royal Bank of Scotland) and Barclays. Barclays was able to recover the last £1,020 transferred – but the £8,200 was gone.
The police then found that there was no one documented as living in the UK under the fraudster’s name, the mobile number was untraceable and he had never lived at the address given.
Ms Astley said: “When I opened an account for my 15-year-old daughter the bank made us jump through hoops. It makes you wonder what checks Barclays actually did.”
Three years later, after Ms Astley continued to press the police for answers, they finally told her in June this year that Barclays had accepted just one ID card from the criminal to open the account.
Barclays said at the time that in “limited circumstances” it accepted a single document as proof of ID to open an account if it met the standards “detailed in industry guidance”. The bank would not disclose what the circumstances were in this case. It also refused to tell Telegraph Money how many accounts it had allowed to be opened using just one form of ID.
A Barclays spokesman said the fraudster’s card “met the minimum requirements, had the appearance of a genuine document, and passed verification checks.”
The spokesman suggested it would not have investigated the details provided as thoroughly as the police later did. Another reader, Dave Slater, was also targeted by one of Barclays’ criminal customers in 2013. But it was not until May this year that the investigation revealed that the fraudster had opened an account using ID that police said was “highly likely” to be fake.
Mr Slater, like Ms Astley, was experienced in buying vehicles online and thought the bargain Nissan Navara he found on eBay would be the perfect vehicle for starting his handyman business.
The fraudster said via online chat that the £6,500 he transferred for the pickup truck would be kept safe in a holding account. Mr Slater, 38, was sent an eBay invoice that looked genuine and made a bank transfer on June 17 2013.
Mr Slater attempted to contact the criminals that day but they had gone quiet. He suspected foul play and reported the matter to the police, but didn’t contact his bank, Santander, or Barclays until June 20.
Mr Slater, from Essex, said Santander tried to recall the funds from Barclays but the money had already been drained. He took the matter to the financial ombudsman on the grounds that Barclays had been negligent in allowing a criminal to open an account and had failed to correctly carry out its money laundering procedures.
However, the ombudsman refused to look into the matter as the complaint did not relate directly to Barclays’ behaviour in relation to him, as a non-customer. Mr Slater eventually gave up but decided, at the end of last year, to go back to the police to request details of the account opening procedure carried out by Barclays. In May the police said the fraudster was part of a criminal network responsible for losses amounting to £1.7m. They said the criminal used a genuine council tax bill to open the Barclays account, but that the ID card used was probably a fake. Despite this evidence Barclays insisted it followed the correct procedures. A spokesman said the account was opened with two documents that appeared genuine and passed its controls. It added that in May 2016 it had stopped accepting national ID documents not issued to a national standard from a central source. Mr Slater is now taking legal advice.
Stephen Rosen, head of banking and financial disputes at law firm Collyer Bristow, said: “Banks have significant resources to invest in tackling fraud and it is a great shame they don’t use them. Unfortunately these corporations are not giving this matter the focus it deserves.”
UK Finance, the new financial services trade body, said tackling fraud was a top priority for the industry and banks “work closely with law enforcement and government to continuously improve systems and safeguard against criminal activity”. Gideon Roseman took immediate action after he found that he’d been scammed out of £20,000. Mr Roseman, a barrister, was duped in a new “builder fraud” scam, where conmen hack into builders’ email accounts and convince customers to transfer money for building work into their own bank account.
Mr Roseman discussed the work he was having done on his West Sussex home with the fraudsters via email before transferring £20,400 from his Barclays account to a Santander account. However, after realising the scam and acting quickly he managed to recover all his money. He used his legal knowledge to navigate the system, but here is how you can do it too.
Mr Roseman said the first step was to call your bank to report the incident. However, most fraud departments are open only during office hours; many scammers will exploit this and act on Fridays or bank holiday weekends.
Next, go as quickly as you can to the nearest High Court or District Registry, of which there are around 40 across England and Wales. Only a High Court judge can grant an injunction to freeze the assets in a bank account.
Before going to court you need to fill in an application form, called N244, and another form, Practice Direction 25A, for an interim injunction, both of which are on the justice.gov.uk website. You will need evidence of the fraud – Mr Roseman used emails and copies of bank statements – and any other supporting evidence. He said judges were very helpful to the general public and would help guide them through the process.
However, there is a cost: an application fee of £150 and a charge of 5pc of the assets involved up to £200,000 (in Mr Roseman’s case, £1,000).
“That is the gamble, and you will think ‘am I throwing good money after bad?’,” he said. “But once you’ve got the freezing order you ask the court to grant an order to disclose all information about the fraudster and the bank account.”
This information includes the fraudsters’ names and addresses, any other signatories on the bank account, bank statements and details of other accounts the fraudsters are linked to.
You then take the court order to the fraudsters’ bank (it will have a special department that deals with court orders) and it will disclose this information, usually within 24 hours. You can ask the judge to stipulate a deadline as time is of the essence, said Mr Roseman.
Once the bank has handed over this information you can trace where your money has gone. If you’re lucky it will have remained in the initial bank account, in which case that bank can return the money. More likely is that the money has been moved through different accounts. You may need to go back to court to get another order on these accounts.
In Mr Roseman’s case, he determined that some of the money was still sitting in bank accounts, which the bank was then able to return to him. He then traced some of the money to a payment to a legitimate business. He called that firm to explain that it had taken stolen money. He was lucky that the order had not yet been processed, although the company had taken payment. After further proof from him it transferred the money back to him.
The information he received also showed that some money was still in the fraudster’s Barclays account more than 24 hours after he had reported the theft (although the money was later moved). This meant that ultimately Barclays reimbursed him for this £9,000.
Mr Roseman admitted that it was all a “fairly laborious process” but said it was your best route to get your money back, as “you really are on your own”. He said: “Without the bank statements you do not have a clue. That information is key to all of this.
“Getting the information also puts you in a very good position to go after your own bank.
“If they have taken more than a few hours to do anything and as a result of any delay the fraudsters have moved money away, with the information you get through the courts you will be in a much stronger position for them to compensate you,” he said.
Criminals operate thousands of bank accounts – leaving other customers vulnerable, warns Amelia Murray ‘Banks have significant resources to tackle fraud but don’t use them’