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Scam victims to be refunded by banks

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Scam victims to be refunded by banks

Unread postby Wayne » Tue May 28, 2019 5:17 pm ... 2EXlGDxebI

By Kevin Peachey
Personal finance reporter
6 hours ago
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New protection for individuals tricked into transferring money to fraudsters has now taken effect - but not all banks are signed up to the scheme.

Some 84,000 bank customers lost money - sometimes tens of thousands of pounds - last year after being caught out.

Only a fraction of the amount lost was refunded by banks. Now a new code should mean more will be reimbursed.

The refund will come from a central pot in cases when neither the bank nor the customer are to blame.

Which banks have signed up?
Eight banks, covering 17 brands, have committed to implement the code immediately:

HSBC (including First Direct and M&S Bank)
Lloyds (including Halifax, Bank of Scotland, and Intelligent Finance)
Metro Bank
RBS (including NatWest and Ulster Bank)
Santander (including Cahoot and Cater Allen)
Starling Bank
The largest banks have established a fund to immediately reimburse customers who are in the "no blame" category.

How are people tricked?
Fraudsters have shifted much of their attention from trying to crack bank systems to trying to con individuals.

This may involve impersonating someone, such as a homebuyer's solicitor or a builder, whom the individual was expecting to pay. In other cases they may be selling non-existent goods online.

Some of the more elaborate frauds see the con-artists using social media and other avenues such as data breaches to gather information about their victim, making it more likely that potential victims believe they are genuine.

In all these cases, the individual authorises the payment. Banks have often refused to refund these frauds as a result.

'How I lost, then regained, a life-changing sum'
Alex Luke was scammed by thieves using a sophisticated con in December 2016. It took criminals less than 24 hours, using 33 fraudulent payments, to empty her account of about £180,000.

Having started a small business in 2008, she had managed to save up the money as a nest egg which she had planned to use for her and her children's futures.

Image copyrightALEX LUKE
Image caption
Alex Luke (left) says she was determined to fight her bank after it initially blamed her when criminals emptied her account
But thieves tricked her into believing they were calling from BT before persuading her to hand over sensitive security details to gain access to her account.

Although £63,000 was traced and returned to Alex in the following weeks, it still left about £118,000 unaccounted for. Her bank, Santander, refused to refund the money.

But after two years, she won her case with the Financial Ombudsman Service and the bank refunded the rest.

"It [getting the refund] has brought back some of the negative memories I've got, but I'm so utterly delighted and grateful. I'm a different person," she said.

Read Alex's full story here
How will the new code work?
People who realise they have been caught out in these "authorised push payment" scams should report the fraud to their bank immediately as normal.

From now, payment providers - primarily banks - that are signed up to the voluntary code will have a new set of criteria to judge whether the customer should get the money back.

Previously, banks only tended to reimburse people if there was an obvious fault in the way the payment was handled by the bank. Some £354m was lost in this fraud to individuals and businesses last year, but only £83m was refunded.

Now anyone who has taken reasonable care, or has any element of vulnerability, is much more likely to receive a refund of the lost money.

Millions lost in 'celebrity-backed scams'
Fraud victims let down by 'inconsistent policing'
The larger financial institutions involved will contribute to a pot, which any of the seven signatory banks can draw on to refund people when neither the individual nor the bank is to blame. A long-term funding solution for this should be agreed by the start of next year.

A decision on whether someone is refunded should be taken within three weeks, or within seven weeks for complicated cases. Disputed cases that go to the Financial Ombudsman Service will take much longer to resolve.

Ruth Evans, independent chair of the APP Scams Steering Group, said: "For the first time, any victim who is a customer of a signatory firm will be fully refunded, as long as they meet the standards expected of them.

"From today, the majority of consumers will be covered by the code."

What are the pitfalls?
Anyone who has already been a victim of such a fraud cannot ask for their case to be reconsidered under the new rules.

A victim who has been "grossly negligent" will not be reimbursed.

Significantly, not all banks are signed up to the code. Banks such as Co-op and Virgin, which were not involved in drawing up the rules, said they could only sign up in the future. The Payment Systems Regulator has also ruled that the code should be voluntary, rather than mandatory.

Moreover, one bank - TSB - has broken ranks in announcing a guarantee that it would automatically refund all "innocent" customers who have been defrauded.

Other banks have suggested that a blanket refund policy would simply encourage fraudsters to try their luck.

A separate scheme to ensure a recipient's name is as important as the bank account number and sort code when payments are made - designed to cut out much of this kind of fraud - has also been delayed until the end of March next year.
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Name checks on payments face delay

Unread postby SlapHappy » Tue May 28, 2019 6:25 pm

Name checks on payments face delay
By Kevin Peachey
Personal finance reporter
14 February 2019

A system making a recipient's name as important as the bank account number and sort code when payments are made could be delayed by up to 18 months.

The Confirmation of Payee system means anyone making a payment will be alerted if the name does not match the account.

It is designed to prevent millions of pounds worth of fraud and regulators wanted it to start in July.

But UK Finance, which represents banks, said the system would not be ready until "some time next year".

The Payment Systems Regulator, which will ultimately set the deadline, said it wanted the new rules to be in place as soon as possible, but only when they could be effective.

At present, anyone making a payment adds the intended recipient's name, but it is ignored by the bank. Only the account number and sort code need to match for the payment to be successful, so fraudsters pose as someone legitimate to trick victims into paying them money.

How Confirmation of Payee will work
When setting up a new payment, or amending an existing one, banks will be able to check the name on the account of the person or organisation you are paying.

If you use the correct account name, you will receive confirmation that the details match, so you can proceed with the payment
If you use a similar name to the account holder, you will be provided with the actual name of the account holder to check. You can update the details and try again, or contact the intended recipient to check the details
If you enter the wrong name for the account holder, you will be told the details do not match and advised to contact the person or organisation you are trying to pay.
The aim of Confirmation of Payee is to cut down on so-called authorised push payment (APP) scams, in which people are conned into sending money to another account.

One APP victim was Angelene Bungay, of Shrewsbury, who was duped into paying £13,000 to someone posing as the builder carrying out her loft conversion. She was not refunded by her bank. Banks typically refund only about a fifth of the money that goes missing, pointing to legislation that says customers may be liable if they authorise the payment and are negligent.

Hundreds of millions of pounds have been lost in this kind of scam, with some victims losing life-changing sums.

During evidence to the Commons' Treasury Committee, Stephen Jones, of UK Finance, said for the first time that it was the intention that victims would be reimbursed when neither the bank or the victim were to blame for the fraud. This could eventually be funded from insurance, although other options are being considered.

Start date unconfirmed
He also said that Confirmation of Payee would not be ready by July, which was the regulator's suggestion during consultation, but some time next year. He said it had not dropped down the list of banks' priorities, but was a complex change in their IT and processing systems.

"This is a big change at a time of a lot of change," he told the committee.

A spokesman for the regulator, the PSR, said: "We want to see Confirmation of Payee brought in as soon as possible and also make sure that when it is introduced, it is an effective way to stop this crime taking place.

"As it stands, we are still working through the responses to our consultation and so no decisions on timing have been made."

Consumer groups have previously accused banks of dragging their heels on introducing the system.

Gareth Shaw, from Which?, said: "Any extended delay to this vital measure would be a huge betrayal of bank customers and is likely to result in millions of pounds being lost unnecessarily to bank transfer scams, with devastating consequences for the victims."

How to protect yourself against fraud
Banking trade body UK Finance offers the following advice:

Never disclose security details, such as your PIN or full banking password
Don't assume an email, text or phone call is authentic
Don't be rushed - a genuine organisation won't mind waiting
Listen to your instincts - you know if something doesn't feel right
Stay in control - don't panic and make a decision you'll regret
If anyone asks you for money on the Internet they are always a scammer, 100% of the time.
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