Scam Victims to be Refunded by their Bank

People who make a payment to an account that they believe belongs to a legitimate person or business, that turns out to be a fraudulent account run by a scammer, will now in most cases be given a refund by their bank.

The added protection for consumers is due to a new code of practice agreed by most major banks. The code states that victims should be reimbursed unless they ignored their bank’s warnings about the scam or were ‘grossly negligent’ in transferring the money.

It applies to scams reported from Tuesday 28 May and only to transfers of money between UK accounts, overseas accounts aren’t covered. Until now, while banks have generally given refunds when payments are fraudulently made without customers’ authorisation, they haven’t been obliged to give a refund when someone has been tricked into making a payment themselves.

This type of scam is called an Authorised Push Payment (APP) scam as the customer unwittingly authorises the payment to be made, usually either online, in person or over the phone. It is reported that £228.4 million was lost in 2018 due to APP scams.

The voluntary code commits banks that are signed up to it to a series of measures to tackle APP fraud, such as educating customers about scams and how they work. The code also encourages banks to identify customers who are at higher risk of becoming a victim, warn customers when they’ve spotted a scam and try to delay payments while investigating.

Scams can have a devastating impact on people, causing distress and hardship, some people will have lost whole life savings. This new code is therefore seen a real positive step forward until the industry can agree more permanent plans on how victims of such scams will be refunded.

If you think you have been a victim of this type of scam, then report it to your bank. For advice about scams and to report something to Trading Standards call the Citizens Advice consumer helpline on 03454 04 05 06.

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