Psychological tricks that meant Catriona didn’t stand a chance when scammer set out to steal her £241,000 savings
WHEN Catriona Oliphant got a phone call warning her there had been fraudulent activity on her and her elderly mother’ s bank accounts, the ti ming could not have been worse.
Catriona’s mother had recently been diagnosed with terminal cancer and given just months to live. Catriona, 60, says: ‘At the very moment the phone rang, I was at my mother’s bedside with the GP discussing arrangements for palliative care.’ So when the authoritative- sounding caller informed her that both her mother’s and her own bank accounts had been hacked, it was almost too much to compute.
Catriona, a former lawyer for City of London firm Slaughter and May, was already distraught at the news of her mother’s failing health, and was terrified their life savings were at that moment being drained.
However, Catriona, who has also had cancer treatment, was savvy enough to be very wary. ‘ Why should I believe this is not a scam?’ she demanded of the caller. In reply, he said he would prove he was genuine.
And so began as cam that would cost Catriona her life savings. Over several days, the fraudster, who claimed to be Alan Smith working with the National Crime Agency, won Cat rio na’ s trust and tricked her into moving money out of her accounts. The highly-sophisticated scam cost Catriona more than £241,000.
To date, four months on, she has not had a penny returned.
Such scams are on the rise. Authorised ‘ push payment’ fraud, to which Catriona lost her money, is rife. In the first half off last year, more than £ 1 million was lost to it every day.
Victims are convinced to make payments to criminals who cleverly claim to be from a trusted organisation, such as the police, Government or a bank.
The number of victims has risen sharply during the pandemic as criminal stake advantage of people’s heightened fear and anxiety.
Whether a victim is reimbursed by their bank is little better than pot luck. Last year, one high street bank reimbursed just one per cent of customers who were victims of a scam. Another bank repaid 99 per cent of its scammed customers.
Catriona’s bank, HSBC, has yet to decide whether she will be reimbursed, or even to inform her whether any of the funds have been recovered.
HOW THE FRAUDSTERS MADE THE SCAM WORK
THE scammer, who called himself Alan Smith, said he was from the National Crime Agency and on a team working to catch hackers. He claimed that Catriona’s bank, HSBC, was known to have a criminal insider whom they were trying to catch.
Alan said he needed her help to catch the hacker by using a series of bait payments into specially created temporary accounts.
He reassured Catriona that the bait payments would not involve any of her own money – the agency would pay the money into her current account and she could then transfer it out again.
However, what Catriona did not realise was that the fraudster had gained access to her accounts and was moving money from her savings into her current account.
So when she was moving money she thought was from the agency into the new accounts, she was actually moving her own.
To gain Cat rio na’s trust, the scammer told her criminals were already trying to drain her HSBC Premier account. To prove it, he showed her fake images of her current account with unauthorised payments going out.
To this day, Catriona thinks the timing of the scammer’s contact is suspicious. ‘They targeted me when I had a large sum of money in my account,’ she says.
‘I would not normally have more than a few thousand pounds in my account, but I had just sold my house in London to help mum to buy supported living accommodation. How did they know I had that money unless they had inside knowledge?’
COULD THE SAME THING HAPPEN TO YOU?
READING about someone else’s scam experience, it’s easy to think you would never have fallen for it.
But Elisabeth Costa, a director of the Behavioural Insights Team, says scammers are experts in putting us into a state where we are unable to make good decisions. ‘They use techniques to evoke a “hot state”’ she says. ‘This is when we are feeling a strong visceral emotion, such as anger or panic. In this state, we are much less likely to be making well thought through decisions.’
Fraudsters create this hot state by, for example, telling us our money is under threat, which understandably triggers panic. Or they suggest action needs to be taken immediately, which puts us into a frenzy.
Costa says you may be more likely to fall victim if you are dealing with other big issues. ‘If you are coming into that moment with other background stresses and pressures, it is probably easier for the scammer to trigger that hot state,’ she says.
Catriona’s scammer appears to have used all of these psychological tricks. They whipped up a hot state by telling her that money was being drained from her bank account.
They undermined her trust in HSBC by telling her the bank was in on the fraud. That way, when her bank asked her if she definitely wanted to go ahead with the transactions, she ignored them.
The fraudsters also appealed to Catriona’s sense of civic duty by telling her that unless she helped them catch the hacker, other victims would lose their money.
Catriona was also caught out at a moment of extreme vulnerability when her decision-making capabili
ties were naturally impaired. Arguably, she didn’ t stand a chance. And arguably, against such sophistication, most of us put in her position would not have stood a chance either.
HOW CAN THESE CROOKS EVER BE THWARTED?
THERE are several things that individuals can do to protect themselves. Take Five is a national campaign run by UK Finance to spread the message of ‘stop, challenge and protect’. That means stop and think before you act, challenge anyone who asks for your financial information, and protect yourself by reporting it immediately if you think you have been scammed. However, Costa believes the responsibility lies not with individuals, but with the banks. ‘The onus should be on the banks and institutions to put in place product design to stop scams,’ she says.
Banks work to make it as easy as possible to move money around online, which is great in general, but not in the case of a scam when a moment’s pause and reflection could stop someone making a transaction they may live to regret for the rest of their life.
Prompts during the bank transfer process to ask you to step back and question whether you are making the right decision can help. However, in Catriona’s case these prompts understandably fell on mistrustful and deaf ears.
Fraud expert Richard Emery, of consultancy 4Keys International, explains: ‘ The victim was up against a very sophisticated scam in which she had been led to believe she was making genuine payments. Warning messages would not have been effective.’
WHAT ABOUT A REFUND FROM YOUR BANK?
AS SOON as she realised she had been scammed, Catriona contacted the banks of the beneficiaries to warn them they had received criminal funds. Four months later, she still has not been told if any of her money has been recovered.
Last year, a voluntary scheme was launched that requires banks to reimburse blameless customers. Its guidelines state that vulnerable customers should not be blamed. However, not all banks have signed up and only around a quarter of victims are fully refunded. Even the banking industry agrees the scheme is flawed and needs improvement.
Katy Worobec, managing director of economic crime at UK Finance, says: ‘ The voluntary code on authorised push payment fraud has introduced significant additional protections for consumers, with more than £89 million reimbursed to thousands of customers since it was introduced in 2019.
‘However, it is clear the code is not always working as intended, with a lack of consistency in customer outcomes and a lack of clarity for signatories in how they should implement it. We agree with the regulator and consumer groups that new legislation and regulation is needed to help prevent people falling victim to these scams and ensure consumer protections apply across the banking industry.’
Emery believes there is a lot more the industry could do. For example, banks could better monitor accounts that suddenly receive large sums from numerous beneficiaries.
They could also block high value transfers to new recipients for a few hours so the sender has time to reflect on their decision.
Banks could also work with the police to alert them when they think a scam is in progress.
However, all this would be too late for Catriona Oliphant. Last week was her mother’s funeral and without that £241,000, Catriona is left in penury, unable to buy a new home.
All she can do is pray that HSBC has the decency to reimburse her so she can start putting her life back together again.