Nationwide: ‘It’s not our fault you lost £8,700’

In the latest case of transfer fraud, the building society will not take responsibility for serving a criminal. By Amelia Murray

Experts have condemned the banking industry for its inconsistent approach in dealing with victims of “transfer fraud” – which is now one of the fastest-growing forms of financial crime. The fraud usually involves email interception or some form of trickery, whereby the victim unknowingly sends money to a criminal’s account. In many cases – but not all – where the recipient is proved to be a criminal, the bank that operated their account makes good the victim’s loss.

Telegraph Money reported how David Burton and Derek Mackenzie were reimbursed by TSB after falling victim to eBay fraud, on the grounds that the bank allowed fraudsters to open accounts with false information (see box below). Now, in a

IT WAS DIFFERENT WITH TSB: THE BANK ACKNOWLEDGED ITS ROLE – AND PAID UP

Earlier this year two fraud victims, David Burton and Derek Mackenzie, were refunded by TSB on the grounds that the accounts they transferred money into were opened with false information.

Mr Burton paid £3,400 to a fraudster on eBay for a nonexistent motorhome in 2014.

When it failed to turn up he contacted his own bank, Barclays, but the money had already been cleared from the TSB account.

Mr Burton also reported the crime to Action Fraud, which passed it on to the police for investigation.

A report from Bloxwich police revealed that fake details were used to open the account. remarkably similar case, Nationwide has refused to pay back victim Balazs Kelemen the £8,700 he transferred into a fraudster’s account operated by the building society. Mr Kelemen believed he was buying a BMW.

A police report later confirmed that a false Romanian ID card and counterfeit British Gas utility bill in the name of Constantin Chescu was used to open the Nationwide FlexAccount on Jan 10.

The criminal was apprehended and in May charged with “fraud in relation to opening accounts, using false identity documents and moneylaundering, in relation to receiving victim’s monies and subsequently withdrawing the funds”.

He was sentenced to 12 months in prison in July.

Mr Kelemen, 33, made two payments totalling £8,700 on Jan 23 and 24 to a firm called BC Motors, Following pressure from

TSB admitted that the opening of the account did not meet its “strict anti-fraud requirements and ID checks”.

It refunded the £3,400 along with £250 compensation.

Mr Mackenzie got his money back from TSB on similar grounds after he transferred £7,858 to its criminal customer for a cherry picker he saw on eBay. A data disclosure from Devon and Cornwall Police revealed that the fraudster was able to bypass TSB’s systems using a “made up” National Insurance number.

TSB agreed to reimburse Mr Mackenzie the full amount, along with £300 and interest.

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which turned out to be a fake website. He was one of 32 people who reported the company to the police.

When the car failed to materialise, Mr Kelemen, who lives in Southampton, realised the ruse.

But by the time he called his bank HSBC on Jan 31, the money had already been drained from the Nationwide account. Mr Kelemen also reported the crime to Action Fraud, the UK’s cybercrime and fraud reporting service. Despite the conviction, Nationwide refused to accept responsibility for the fraudulent account. It insisted it was not negligent. However, Richard Emery of fraud consultancy 4Keys International and an expert witness, argued that if the mutual had done its due diligence “properly” it would have spotted the documents were fake and the account would not have existed.

He said: “I don’t accept the argument that the documents ‘looked all right’. Nationwide has a moral obligation to refund the customer. Essentially its processes failed.” A spokesman from UK Finance, representing banks, admitted fraudulent information could be “extremely difficult to detect”.

Telegraph Money has long campaigned for the banks operating criminals’ accounts to take greater responsibility for other, innocent users of banking services.

The Payment Systems Regulator, which oversees transactions, is issuing

a report on Nov 7 on this issue. Last week Barclays became the first British bank to introduce pop-up windows that warn customers they may have been targeted by fraudsters when they make online payments that appear to be “suspicious or out of character”.

And on Thursday Lloyds announced a new measure that would see its customers being prompted to answer additional security questions before setting up new online payments.