Banks should not refuse to refund victims of transfer scams simply by accusing them of ‘gross negligence’, says the Chief Ombudsman of the Financial Ombudsman Service (FOS). Caroline Wayman says that banks often refuse to make refunds, despite their customers being victim to highly sophisticated frauds using technology and manipulative ‘social engineering’.
She says that fraudsters are using loopholes in new technologies to their advantage. “Your first step toward being scammed may be putting your details into an identical, but fake banking website – or responding to a text message that, on the face of it, looks like it’s from your bank,” she said.
The Ombudsman argues that gross negligence is more than just being careless or negligent. She says that when the FOS is asked to adjudicate on a dispute it will expect to see clear evidence that the bank has thoroughly investigated the complaint and thought through what more could have been done to protect the customer.
She says it is increasingly difficult for banks to claim that their customers have been grossly negligent to avoid refunding fraud victims. Despite this Lee Boyce wrote in This is Money “We’ve even seen banks write to customers on the same day they have reported fraud saying it has been fully investigated and it won’t be paying the money back thanks to those two dreaded words.”
The FCA is currently consulting on giving the Ombudsman more powers to help victims of fraudulent bank transfers. These are where a fraudster tricks a payer into making a payment into an account controlled by the fraudster.
“Banks scams are not just limited to individual customers,” said James Burgoyne, Director – Claims & Technical, Brunel Professions. “There are many cases where businesses and professional firms have been targeted by these thieves. The best defence is for staff at all levels to be regularly reminded of the threat and new tactics being adopted. Awareness of the need to take a step back from the immediate situation, and procedures to verify requests for payment regardless of apparent origin are important protections to be adopted by all firms.”
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