Push payment frauds: 'banks deny refunds due to victim blaming'

Some victims of bank scams are being expected to act as 'financial detectives' in order to get refunded by their bank, research claims.

Authorised push payment fraud (APP fraud) has emerged as a big problem in the UK over the last few years.

This is a scam where the victim is duped into willingly sending their money to the scammer, and can take many forms.

It might involve the scammer posing as someone from your bank, who convinces you that your account has been compromised and so you need to quickly move your money to a new, ‘safe’ account.

Or it could be the fraudster intercepts emails from your conveyancer when you’re in the process of buying a home, posing as your solicitor so that you send your deposit to an account they control rather than the legitimate account of your conveyancer.

According to figures from UK Finance, the banking trade body, around £456 million was lost to APP fraud in 2019, up from £354 million the year before, and it’s believed to have continued growing since then.

If you've fallen victim, have a read of our guide to getting your money back from you bank.

Victim blaming

An industry code was put in place by the banks themselves, to ensure that when people are duped by these scams they can get their money back.

Crucially, this protection applies when the victim is found not to be at fault for having fallen for the scam.

The problem is that the code is being applied poorly, with the victims all too often being blamed, and therefore denied getting any money back.

A previous study by consumer champions Which? found that victims were held fully responsible for 60% of fraudulent payments, while in 17% of cases they were at least partially blamed.

What’s more, the code has been very inconsistently applied, depending on the individual bank.

It comes down to complete fluke whether you end up banking with a firm that takes a more forgiving approach to scam victims or whether you happen to bank with a firm that almost automatically blames you in the event of fraud. 

Getting it wrong

If you’ve been scammed, and you don’t believe that your bank has handled the situation properly, then one option is to take your issue to the Financial Ombudsman Service (FOS).

This independent body is absolutely free to use; you just have to give your bank eight weeks in order to put the situation right themselves before contacting the FOS.

However, analysis of FOS data by Which? found that in almost three-quarters of cases regarding authorised fraud, the FOS sided with the complainant against the bank.

That’s significantly higher than the 57% uphold rate for general fraud and scam cases, and the 32% uphold rate for all complaints of any nature.

The message is pretty clear here; just because your bank tries to blame you if you’ve been caught out by a scam, that doesn’t mean they are right to do so and it may be worth raising the issue with the FOS.

Setting the bar too high

Which? said it has seen case studies of scam victims where the bar for what they could reasonably have done to avoid being duped is set ridiculously high, effectively demanding they act as “financial detectives”.

For example, in one case a customer at Nationwide was tricked into handing £53,500 to a fraudster.

The scammer had posed as the victim’s solicitor ‒ using an email address that was only one digit different from the solicitor  ‒ and convinced them to send the money into the scammer’s account.

The FOS sided with the victim on this case, after Nationwide had initially refused a refund, stating that it wasn’t realistic to expect people to look out for tiny discrepancies in email addresses.

Another example involved a Santander customer who was conned into booking flights through a fraudster who was running a convincing scam, utilising fake documents like an ATOL certificate and a flight schedule. They were initially refused a refund, but again the FOS decided this was wrong.

Things have to change

If the banks are allowed to effectively write their own rules and apply them as they see fit ‒ and do so in the shadows, without any transparency about how many times people do actually get a refund ‒ then the victim-blaming that we are seeing seems inevitable.

Instead, it clearly needs a more independent system of oversight, where the rules are set by a proper regulator, and the banks have to be open about the decisions they make and why.

Banks have been given the chance to handle these refunds fairly, and have evidently failed. We can’t allow them to continue passing the buck to scam victims.