Bank transfer fraud is costing victims £28,000 every hour as banks have only reimbursed less than half of the money lost to scams.
Between July 2019 and the end of June 2021 a total of £854m was lost across over 300,000 customers who fell victim to authorised push payment fraud.
Most banks have signed up to voluntarily reimburse all customers who are not at fault but given that this works on a voluntary basis, only 42% of losses was returned, Which?’s analysis of UK Finance figures show.
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As a result, £495m has not been reimbursed, leaving scam victims to shoulder net losses at a rate of £4.7m a week — equivalent to £676,881 a day or £28,203 an hour.
This means that victims are losing more money to bank transfer scams every hour than the average UK worker earns in a year, which currently stands at £25,971.
In one example, Which? said a Santander (BNC.L) customer in his 80s was left more than £3,600 out of pocket after falling for an impersonation scam on WhatsApp. The scammer pretended to be his son before tricking the senior citizen into transferring money to an account to supposedly help him pay for a bill.
The HSBC (HSBA.L) account he was asked to transfer the money to was not in his son’s name, but he thought it might be a friend who he owed money to, so he went ahead. When he talked to his son shortly after, he said he had sent no such message.
After several weeks spent investigating, Santander refused to refund him. The bank only decided to reimburse the victim after Which? helped him write a complaint.
Which? said there has been a rise in WhatsApp scams, also known as the “mum and dad scam”, where fraudsters pose as family members in order to trick victims into transferring money. One in five social media scams reported to Which?’s scam sharer tool between March 2021 and January involved WhatsApp.
Rocio Concha, Which? director of policy and advocacy, said: “Despite huge sums being lost to bank transfer scams on an hourly basis, low reimbursement rates based on inconsistent and unfair decisions by banks demonstrate how the voluntary code isn’t providing the safeguards promised to victims.”
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A voluntary reimbursement code on bank transfer scams was introduced in May 2019, and most major banks have signed up. It instructs banks to reimburse all customers who are not at fault.
Concha added: “While commitments to make reimbursement mandatory were a huge win for consumers, it’s vital that the government introduces the right legislation that will ensure victims get fair and consistent treatment.
“The regulator must also ensure it is ready to introduce and enforce mandatory reimbursement rules the moment that this legislation is passed.”
Which? said the current reimbursement code is leaving many victims facing an uphill struggle to recover their money.
The Lending Standards Board and Financial Ombudsman Service have also found issues with inconsistent and unfair treatment of victims.
Which? is calling on the government to act on its commitment to legislate for mandatory reimbursement of victims as losses from APP fraud have risen year on year.
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