Banks make bad fraud reimbursement decisions in many cases, says Which?
Some large banks make the wrong decisions about certain scams and customer refunds in about eight out of ten cases seen by the mediator, according to Which ?.
A “payback lottery” leaves many victims facing an uphill struggle to get their money back when they have been targeted by criminals, the consumer group said.
Many banks have subscribed to a voluntary refund code on wire transfer scams, also known as authorized push payment fraud (APP), which asks them to reimburse customers who are not at fault and provide them with adequate assistance.
However, the number of new authorized fraud complaints – the vast majority of which relate to APP scams – filed with the Financial Ombudsman Service (FOS) more than doubled in 2020-2021, from 3,600 to 7,770.
Three-quarters (73%) were withheld in favor of the client. Authorized fraud also includes certain card frauds, where the dispute involves whether the consumer has authorized a payment or withdrawal with their card.
Who? said the numbers he got from the FOS NatWest and Royal Bank of Scotland (RBS) – which are part of the same banking group – to be wrong 86% of the time, with Santander (82%) and Bank of Scotland ( 81%) Next.
NatWest told Which? : “At NatWest, our proactive stance and our relationship with FOS have brought about the resolution of many of our cases sooner than necessary. As a result, our turnaround rate for the period is inflated, however we expect it to normalize in 2022. ”
While the challenger bank Starling (80%) also had a high complaint rate, this was based on a much smaller number of closed cases than other companies, which ones? noted.
Many fraud complaints against Lloyds Bank (78%), Revolut (77%) and Nationwide (74%) are also confirmed in favor of the customer. Aside from Revolut, these banks are listed as voluntary scams, according to Which ?.
Who? called for much more transparency about how companies behave and their approach to reimbursement, which would require banks to regularly publish data, including their reimbursement rates for all APP fraud cases they handle each and every year.
The numbers also show that, on average, over the past fiscal year, it took the FOS nine and a half months to resolve an authorized fraud complaint.
Jenny Ross, which one? Money Editor said: “Fraud can have a devastating financial and emotional impact on victims, so it is shocking that so many banks do not handle cases properly, often wrongly and unfairly denying victims reimbursement.”
A woman told who? she lost £ 7,000 in just four hours after being the victim of a complex remote access scam after a caller impersonated a BT engineer, but her Santander bank initially refused to repay because she thought she had voluntarily made the payment.
She lodged her complaint with the FOS, who were satisfied the woman had reasonable grounds to believe that she was talking to an actual BT engineer. The bank had to pay it back in full, plus 8% interest as compensation.
Santander told Which? : “We invest heavily in protecting our clients against fraud, scam awareness and fraud, and we work closely with FOS, as well as other industry organizations, to ensure that clients are treated. fairly. “
Lloyds Banking Group said, “We continue to work closely with FOS to make sure we get it right the first time for our customers. “
Nationwide said, “We are working openly and closely with the FOS to understand their perspective on these cases and continue to make improvements to fraud / scam measures as a result.”
Revolut said, “The increase in APP fraud is an industry-wide problem… We communicate with customers frequently to help them spot and prevent fraud.
Starling Bank questioned Which? S findings, claiming that the number of resolved cases concerning it during the reporting period was too low to be statistically significant.
He said: “Overall, we note that, based on this data, Starling accounts for 0.6% of cases against all banks.
“When cases are resolved in one way or another, we take into account the findings of the FOS. We operate a payment review model, which we continually seek to improve in line with scam trends with the goal of preventing customers from making fraudulent payments. “
TSB, which has its own Fraud Money Back Guarantee, said: “Contrary to these numbers, TSB’s Fraud Money Back Guarantee provides life-changing support to customers who have suffered fraud – where we have refunded 98% of all cases of bank fraud.
“We are calling for more transparency on fraudulent refunds and for all banks to publicly display their refund rates, so customers can see how likely they are to receive a refund if they are victims of one. fastest growing crime in the UK. “
Here are the percentages of cases the FOS has retained in favor of consumers after complaints of authorized fraud have been filed, according to Which? Data covering the period April 1, 2020 to March 31, 2021 includes APP fraud as well as cases that did not involve a push payment, for example when the dispute revolves around whether the consumer authorized a payment with their payment. menu.
– RBS, 86%
– NatWest, 86%
– Santander, 82%
– Bank of Scotland, 81%
– Starling Bank, 80%
– Lloyds, 78%
– Revolution, 77%
– National construction company, 74%
– Monzo, 73%