RACHEL RICKARD STRAUS: Banks must reimburse online fraud victims

RACHEL RICKARD STRAUS: Good news that Payment Systems Regulator proposes banks must reimburse fraud victims of online scams within 48 hours

We needed a bit of good news last week, amidst the gloom. Luckily it showed up, in the form of a momentous but barely noticed report published on Thursday. 

All fraud victims who are tricked into sending their money in online scams will be reimbursed within 48 hours, the Payment Systems Regulator (PSR) proposed. 

The regulator predicts that its new rules will see over 95 per cent of bank transfer victims reimbursed, up from the current 49 per cent. 

Good news: All fraud victims who are tricked into sending their money in online scams will be reimbursed within 48 hours

Good news: All fraud victims who are tricked into sending their money in online scams will be reimbursed within 48 hours

Banks will have to reimburse victims unless they suspect they were in on the crime or grossly negligent. All losses between £100 and £1million will be repaid. Banks will be able to charge victims a fee for doing so, but no more than £35. 

The cost of reimbursement will be split between the victim’s bank and the bank to which their money is fraudulently sent. Putting receiving banks on the hook should incentivise them to do more to stop fraudsters opening accounts in the first place. 

These new rules cannot be implemented soon enough. They are under consultation, but unlikely to come into force until next year. Fraud is already the largest contributor to crime in the UK and this type of scam is rising quickly. Victims lost £583million to it last year – a 39 per cent rise in one year alone. 

This is one of the most terrifying and life changing types of scam, in which victims can lose their life savings in an instant. It is also deeply pernicious. In many cases fraudsters spend days or even weeks befriending and gaining the trust of their victim. 

They might tell them they are from the police, their bank’s fraud department, or even a potential love interest. They make up stories to convince their victim to hand over their cash. The emotional impact of that kind of betrayal can be devastating. 

I have spoken with countless victims who have been abandoned by their bank and told they are to blame or that their money has disappeared and nothing can be done. Now, finally, banks will have to accept – as we have been arguing in our Nail the Scammers campaign – that these scams are sophisticated, involve social engineering and that victims cannot be blamed. 

The PSR will also require banks to share information with each other to track down and stop scammers, and publish data on which banks are reimbursing their customers – and which are lagging behind. 

I suspect the new rules will prompt banks to make reporting fraud easier too. If they are left out of pocket if a scammer triumphs, that should motivate banks to pick up the phone instead of leaving terrified victims on hold. The proposals are great news. But I feel for the scam victims who have already lost their savings and will not benefit from them. They may well feel vindicated – the new rules prove that they were never to blame. But that’s little comfort when you’ve been robbed. 

I asked the PSR about existing victims, but it said it cannot apply the rules retrospectively. Still, I think it is worth victims going back to their banks armed with knowledge of these new rules – and to the Ombudsman if their banks still refuse to help. 

Many more people will fall victim before the new rules kick in – they need protecting too.


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