Banks need to tackle web fraud

Losses from online crime are borne by customers but there are simple changes that could help protect them

A child’s bike is stolen, and the police visit the distressed family twice in the space of a few days. Up the road, £37,000 is stolen, but the police don’t bother to visit, and no investigation takes place. Why? Because one is a physical theft, the other happened online.

Britain is suffering an epidemic of financial crime, yet the institutional response is feeble, with banks the most to blame. The Office for National Statistics revealed this month that there have more than 5.8m incidents of cybercrime in the past year, far more than previously thought and enough to nearly double the headline crime rate in England and Wales.

One in 10 of us fall victim to online scams, virus attacks and thefts of bank details every year. The sums stolen are truly spectacular: £193bn a year – 50% more than the annual budget for the entire NHS.

Sneerers will say it’s silly old duffers falling for scams that they would spot a mile off. It’s not. The £37,000 was stolen from a reader paying for building work – not knowing that fraudsters had hijacked the builder’s email and changed the account numbers to be paid. We first wrote about this type of elaborate scam in February, after a record label manager and her husband were conned out of £25,000. They were hardly the types you could accuse of not being internet savvy.

The £134,000 stolen in our story today came from a retired headmaster in full control of his faculties. My own 90-year old father fields calls almost every day from fraudsters. He’s a retired accountant, reads the financial press, and enjoys tantalising the scammers into thinking he’s about to give them all his money. Other older people, though, are among the most distressing victims.

There is one simple reform that should have been enacted years ago, but probably has not been because bank IT systems are creaking after being cobbled together from various mergers and acquisitions.

People are often convinced their money is safe because it is being transferred into an account in their name. But banks pay no attention to account names, basing transfers entirely on sort codes and account numbers. Forcing them to match these up with a customer’s name will halt at least some of these frauds.

A second troubling area is the role of Barclays bank in particular. When the Guardian Money desk receives an email from a reader who has lost money, a colleague will ask “Was it transferred into a Barclays account?”. The answer, more often than not, is “of course”. We may be only seeing a tiny snapshot of the true picture of fraud across the UK, but we are bewildered as to why Barclays seems to feature so frequently. It says it is fighting as hard as any other bank to beat fraud.

When banks were at risk from burglaries, they used iron bars and unbreakable safes. Now the risk of bank theft falls on the customer, the incentive to protect, to chase, to prosecute, has fallen away. The police can’t fight this alone; the banks need to be compelled to do one hell of a lot more.

Contributor

Patrick Collinson

The GuardianTramp

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