Code gives protection to cautious in war on bank transfer scams

Always be wary when making transfers from your personal account online. Photograph: PA
Always be wary when making transfers from your personal account online. Photograph: PA
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People who’ve been tricked into transferring money directly to a fraudster now have a new safety net, which should mean they have a better chance of getting a refund.

Some £354 million was lost to bank transfer fraud last year – most of it stolen from personal accounts. Financial providers were able to return £83m or 23 per cent of the losses, meaning many victims were left out of pocket.

But a new industry code has been put into action, with a funding pot available for blameless scam victims.

Sophisticated scams have been persuading people to transfer money themselves directly to criminals – only to realise after the money has disappeared that they have been conned. Scams could start with emails, texts and cold calls, and people could be persuaded they are transferring money to a legitimate organisation such as their bank or another business.

People in such situations have transferred large amounts in some cases, and because they authorised their bank to make the transfer, they may have lost their cash for good.

By contrast, in cases where scammers steal money from people’s accounts without their knowledge, blameless victims can generally expect to be refunded.

The new code has been introduced as part of a wider fightback against this type of scam – known as authorised push payment (APP) fraud. It means victims who were tricked into transferring money but took reasonable care are much more likely to get their money back – even in circumstances where the customer’s bank has also done everything reasonably expected of it to protect the customer.

The industry has committed to provide initial funding for these “no blame” situations until the end of 2019. A longer-term funding pot should be agreed by January 2020.

The code is voluntary, so not everyone has signed up to it. The banking brands which have committed to implementing the code include Barclays, HSBC UK, First Direct, M&S Bank, Lloyds Bank, Halifax, Bank of Scotland, Intelligent Finance, Metro Bank, Nationwide, Royal Bank of Scotland, NatWest, Ulster Bank, Santander, Cahoot, Cater Allen and Starling Bank.

Meanwhile, TSB has made its own fraud refund guarantee to customers, which aligns with the code but also goes further to cover some situations which may not be covered by other banks.

A name-checking service called “confirmation of payee” is also in the pipeline. The Payment Systems Regulator (PSR) has proposed that the UK’s six biggest banking groups, which are involved in about 90 per cent of bank transfers, fully put the confirmation of payee measures in place by 31 March, 2020. They will make sure the name of the account someone is sending money to matches the name they have entered. Alerts will notify the payer when there has not been a match.

While the voluntary code provides a new safety net, it’s best to avoid getting scammed in the first place.

So always take time to think and check if you’re contacted out of the blue about making a payment. Report any suspect approaches from people to Action Fraud and tell your financial services provider.

Help to avoid scams is available at takefive-stopfraud.org.uk.