Why is it so hard for banks to stop the fraudsters?

Banks are accused of failing to shut accounts used by scammers – but that could soon change

They are a close-knit band of anonymous fraud fighters, who crusade for justice for victims of online crime – and spend much of their time “baiting” and catching the crooks. But what infuriates “Buster Jack” and his secretive colleagues is when they warn a bank about a fraud – such as identifying an account used by crooks – and the bank fails to act.

According to “Jack”, he contacted TSB about an account at the bank that was being used by a scammer to launder funds. Yet three days later someone was persuaded by a fraudster to pay £3,600 into the account – and has not been able to recover the money.

“He had seen an Ikonoskop camera on the Craigslist website and was persuaded to pay for it by bank transfer rather than PayPal. The camera didn’t exist and he realised he’d been scammed the following day, and called his own bank but they said there was nothing they could do – the money was gone.”

The victim contacted Jack, who checked the records of all the accounts that his group had uncovered, only to discover that it was on his list.

“One of my team had tricked a scammer into giving him his bank details,” he says. “The scam item on eBay was a classic car: a Ford Escort RS2000 and posing as a buyer he had been able to get the TSB account number being used by the thieves.

“Our records showed that we had reported to TSB that the exact same account was being used fraudulently three days earlier.

“This was the 79th time that I had submitted a fraud alert to TSB, so they were very familiar with me by then – and yet the bank did nothing.

“Generally when we report an account in this way the bank freezes it within 10 minutes.”

Buster, who has taken on the case on a “no win, no fee” basis, says TSB has refused to refund the individual.

A TSB spokesperson said: “Combating fraud is a top priority at TSB. We work extensively with law enforcement, as well as industry bodies, to bring fraudsters to justice and we’re always on the lookout for suspicious activity. When the fraud was identified, we took the relevant steps to close the account down.”

One of the obstacles fraud victims encounter is that if their money is sent to another bank, their own bank often says it can’t look into it.

But under new proposals from the City watchdog last week, the bank that is the recipient of stolen funds will now be forced to deal with victims, and if the victim is unhappy, they can take the bank to the ombudsman.

In September, the Payment Systems Regulator (PSR) will reveal in what circumstances banks will have to reimburse those who have lost out, which it is hoped will lead to better security measures.

In recent years Guardian Money has featured a number of what are called “authorised push payment” fraud cases. In some cases, emails are intercepted and the victim thinks they are making a payment to a friend or trusted person. Last year an Essex couple lost £120,000 after sending the money to what they thought was their solicitor’s bank account. It emerged that emails asking for the house purchase deposit to be paid had been hacked and they paid the money into an account that was systematically emptied of £20,000 in cash every day.

Campaigners have long called for the account name to be part of the bank transfer process. Currently you can put “Mickey Mouse” into a bank transfer request and the payment will still go through.

It has been argued that if a consumers could see the account holder’s name when making a transfer, this would stop a large percentage of these frauds.

In September 2016, consumer body Which? lodged a “supercomplaint” with the payments regulator, saying that victims of the scams did not receive sufficient protection, and the regulator is now working on ways to set up a “contingent reimbursement model”. It is likely that banks that have not introduced payee confirmation could be forced to refund victims, but only where the consumer can show that they were not reckless.


Miles Brignall

The GuardianTramp

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