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Barclays first bank to publish online scam refund details

All banks must be transparent about the proportion of victims of authorised push payment fraud they refund, says consumer rights organisation Which?

Which? has called on banks to be more transparent about the proportion of victims of authorised push payment (APP) fraud they refund.

Barclays has signed up to a code to do so and has revealed that 74% of customers who suffered losses because of APP fraud in the first two months of this year have been repaid.

APP fraud, also known as bank transfer fraud, occurs when a consumer pays for something which turns out to be fake, and a criminal steals their money. Banks often reimburse customers through the Contingent Reimbursement Model, introduced in May 2019. This sets out when victims who are manipulated into making real-time payments to fraudsters are to be reimbursed and by whom, and banks usually take responsibility.

While Barclays has signed up to a code to publish refund figures, Which? said other banks “remain tight-lipped” about them.

“This lack of transparency isn’t acceptable,” it said. The consumer rights organisation has contacted all major banks and building societies requesting they commit to publishing their reimbursement rates by 28 May. It said banks routinely blame scam victims.

“We believe all banks should publish figures on fraud refunds on a regular basis, rather than cherry-picking specific months. Greater transparency is needed as, in many cases, banks are blaming customers rather than reimbursing them.”

Banks have already signed up to a code to repay victims of APP fraud, but figures from the Lending Standards Board, which oversees the code, revealed that between May 2019, when the code was introduced, and July 2020, banks ruled that 77% of fraud victims were partially or fully to blame for their losses.

It also revealed that in 60% of cases, customers were found to be fully at fault and liable for the losses. It found that victims were only considered blameless in 11% of cases.

”Reimbursement levels vary significantly between banks, but as the data is anonymous it’s impossible to see which offer the greatest support for scam victims – and which need to do significantly better,” said Which?

“We are taking action to encourage greater transparency around fraud refunds. We believe the anonymity of the existing data allows some banks to hide behind very low rates of reimbursement, giving them no motivation to improve their service.”

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Earlier this year, Anne Boden, CEO at digital challenger Starling Bank, called for social media companies to share responsibility for losses to consumers duped into transferring money to fraudsters when buying what they think are genuine goods.

There needs to be cooperation between different sectors to clamp down on APP fraud, according to Boden.

In a blog post in January, Boden expressed her hope that other sectors will shoulder some responsibility for such scams, particularly social media platforms.

“Banks invest billions of pounds into tackling economic crime, but we cannot stop it on our own,” she wrote.

Boden pointed the finger at social media platforms and telecoms networks that are used in various financial crimes. “Very often, [social media] accounts are used for advertising for ‘money mules’ for the purposes of money laundering, selling stolen identity and credit card data, phishing, bogus investment scams and impersonation fraud,” she said.

She said banks “seem to have become the underwriter of all kinds of fraud that are not really financial fraud at all”.

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