Banks not going far enough to combat fraud

Posted by Erika Bone in Banking on 21 December 2016 - Erika is a Credit Analyst at checkmyfile

Banks have been warned that they must start to do more to tackle scams where people are tricked into transferring money to a fraudster’s account. The Payment Systems Regulator (PSR) has stated this in a response to a “super complaint” lodged by the consumer group Which? but the Regulator did stop short of suggesting that the banks should compensate customers who had lost out.

Which? viewed the response as allowing banks “off the hook” and argued that they now have very little incentive to protect consumers from the growing problem of “push fraud”, the name given to the process of conning a customer into paying into the wrong account.

Only one third of all cases are offered some form of compensation by the bank and very often the bank refuses to admit liability and the customer is left out of pocket. Which? was calling for banks to refund customers if they fall foul to this type of fraud, which would have brought them more in line with the credit card companies and the protections they offer for credit card transactions.

The PSR did make a number of recommendations for the banks to implement, including collecting comprehensive data on scams so industry statistics can be produced. They called for banks to work harder to identify potential fraudulent payments and for the industry as a whole to develop best practice standards so a common approach can be developed. Hannah Nixon, PSR Managing Director asserts that, “we need a concerted and co-ordinated industry-wide approach to better protect consumers, and we need to start today.”

Which?, although pleased that the issue of this type of fraud is being addressed, believes that the regulatory authorities and banks are not going far enough to protect consumers and have outlined a number of ways that consumers can protect themselves from the criminals.

The first cardinal rule that Which? outlines is to never disclose security details such as a pin or banking password to anyone. The second is to never assume that an email, text or phone call is genuine. Which? advises never to be rushed into making a payment and to listen to your instincts; if it feels wrong in any way do not transfer the money.

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