Banks’ failure on fraud

THE pandemic has been a festival for fraudsters. I suspect I’m not unusual in that four out of the last six messages on my smartphone are from criminals, two pretending to be from lenders and two masquerading as parcel delivery companies.

The scammers have become so prolific, they contact me more often than my mum.

Covid-19 has expanded the ranks of potential targets, as it created lots of novice users of online banking and internet shopping. It also spawned novel ways to trick people including bogus fines for breaking the lockdown rules and vaccination scams.

It is an absolute myth that only the elderly or the stupid succumb to the onslaught. A report by research group Lexis Nexis found under-25s are the group who suffer the highest rate of fraud attack.

Although they are tech savvy, youngsters are still taken in by cons, which is not surprising as some are highly plausible. I was almost fooled by a fake email claiming to be from Amazon, saying there was an issue with my card and I needed to reenter my details.

This was very convincing, as it arrived immediately after I had made a purchase and was almost indistinguishable from a genuine communication. Fortunately, I cross-checked the order numbers and saw they didn’t match, so was saved from having my account emptied. Many others are less fortunate and suffer ruinous losses.

Nine big lenders have signed up to a voluntary code on refunds for so-called ‘authorised’ fraud – where people are duped into handing over funds – provided they were not complicit or negligent.

Unfortunately, this has proved grossly inadequate. Consumers are still being landed with more than half the total losses, in many cases wiping out much of their life savings.

This is a disgrace. It is inherently not feasible that victims are irresponsible or dishonest in the majority of fraud cases.

ATELLING point is that the rates of reimbursement vary wildly between different institutions, ranging from 30pc to 76pc. Taken at face value, this suggests the clients of certain banks are vastly less deserving of fraud refunds than others, which again is not plausible.

The reality is account-holders are faced with a lottery, where they are at the mercy of their bank’s ethics and compassion, or lack of either.

Knowing how likely your bank is to leave you in the lurch if you are cleaned out by scammers is a vital piece of information.

At the moment, however, they are under no obligation to reveal their fraud reimbursement rates. Barclays and TSB – the latter pays back in almost 100pc of cases – are the only two that make this public.

This is not tenable. Banks should be compelled to display their latest fraud reimbursement rates prominently in branches and on websites, as well as publishing the figures in their annual reports.

A key element in choosing or switching bank is how well that institution is likely to behave if you fall prey to swindlers.

Whatever one’s views on Brexit, leaving the EU could help the fight against fraud.

The Payment Systems Regulator, which supervises transactions, acknowledges the voluntary code is not working. It wants to toughen up the regime.

At the moment, European law that has been incorporated into our system means that in many cases, the banks cannot be forced to reimburse for scams.

The Government should now legislate to change the law, so that the Payment Systems Regulator can force them to do so.

The voluntary code was a step in the right direction, but it is being gamed by cynical operators.

The pernicious practice of victim-blaming needs to end, or we will never beat the fraudsters.