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Banks 0 Fraudsters 1: Banks need to up their game

Fraudsters reported a bonzer financial 1st half of 2021 worthy of any unicorn. 

UK Finance recorded a 71% increase during the first half of 2021 to £355 million for APP (authorised push payment) fraud1. The first time ever APP exceeded credit card fraud. One scam in particular, fake bills to bereaved families, increased 100% in H1 2021 to £45 million. 

Banks, who own the bank accounts which all fraudsters or their surrogate/mules use, continue to look but not implement activities that could slow the growth of fraud. Where such activities are implemented, e.g., Confirmation of Payee, (CoP) which matches the account name on file to the account name submitted, fraudsters move their payee accounts to banks without CoP. This gives the fraudsters plenty of opportunity given 95% of banks do not use CoP. Only the top 6 banks mandated by the Payment System Regulator do so.

The reimbursement program (CRM-Code) in the first year saw on average only a quarter of victims compensated, with two of the big banks finding 90% complicit, no money returned. 

The one beacon of hope for the people after being defrauded is the Financial Ombudsman Service (FOS), an independent service and the final appeal process against the banks views on fraud victims helping the fraudsters. They too are being overwhelmed and requested the banks  ‘to do more to resolve complaints before people are forced to seek help from FOS.

FOS has reversed 50% to 80% UK big banks decisions against their customers 

For the first time in a decade, FOS received more complaints about current accounts than any other product. 

The majority of the cost of the fraud is taken by the banks’ clients and not by the bank. Even though the ownership of bank accounts are the banks, clients are deemed responsible for making the payment to a payee. The banks are only obliged to check the sort code and account number, IBAN (International Bank Account Number). Designed to make payments fast and efficient.  No design requirements for fraud-style tendencies. No one thought about social media impact on payments when Faster Payments was implemented.

Fraudsters are benefiting as the banks are holding their customers responsible for the frauds. Since the figures have been released banks are naturally concerned. If the trend continues; APP and Bank fraud could exceed £1,000 million per year mid 2022.

UK Finance, the banking industry group, has warned the UK Government about a national security threat for Britain requesting coordinated action across industries2.  A new emergency fraud number is being introduced, covering 50% of the banking community.  With one of the banks quoted as saying it's a cultural thing as the British people are too polite to say no and another that their fraudster’s Mule count is less than their fellow institutions only encourage the fraudsters.

Two things would help:

  1. Banks must have a united front against the fraudsters and the regulators – Bank of England, FCA, Payment Systems Regulator and Standard Lending Board – need to ensure safe payment passage between the payer and payee bank.  Here in more information is needed for the payer to make an informed decision on the level of fraud risk being undertaken
  2. Consumers and corporations need a variety of tools that automatically query the legitimacy of the caller approaching them. This will ‘red flag’ communications before any answers are given

Fraudsters are on top and this needs to change. By tackling the fraudsters’ technologies and techniques at source, consumers and corporations can automatically stop scams before they start.  Banks own the bank accounts and should make certain they are together against fraud. The regulators need to actively encourage this behaviour.




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John Bertrand

John Bertrand


Tec 8 Limited

Member since

03 Apr 2020



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