Banks scams: Protecting your money

Published on October 21, 2019 by Blackstone Partners

Banks scams are on the rise and becoming more sophisticated. Every year, thousands of people are duped into authorising payments to fraudsters that they may not be able to receive compensation for. Understanding how criminals operate could help protect your money.

According to figures from Finance UK, more than £616 million was stolen by criminals using a variety of methods in the first half of 2019 alone. Authorised push payments (APP), where customers are tricked into authorising a payment to an account controlled by a criminal, accounted for £208 million. It’s a crime that’s rising due to data breaches that compromise personal data, allowing fraudsters to gain the trust of their victims.

Other types of fraud reported include unauthorised card used, remote banking, cheque fraud and sophisticated digital skimming, where card data is stolen.

The good news is that the finance industry is often preventing fraud from taking place. During the first half of 2019, it stopped £820 million of unauthorised payments; the equivalent to £2 in every £3 of attempted fraud being stopped. This accounts for £4.5 million each day. However, that’s of little consolation if you’re among those that have lost your savings. Remaining vigilant against fraud is critical for protecting your money.

Katy Worobec, Managing Director of Economic Crime at UK Finance, said: “A new voluntary code was introduced in May that has significantly improved consumer protections from authorised push payment fraud, with signatory firms committed to reimbursing victims providing they have met certain standards.

“However, criminals are continuing to exploit vulnerabilities outside the financial sector to obtain customers’ data that is then used to commit fraud.”

What is APP and when can you receive compensation?

The first step to reducing the risk of being affected by APP is to understand what it is.

It usually starts with fraudsters gaining access to your personal information. This may be through hacking into an email account or purchasing stolen data. With this information, they’ll attempt to present themselves as a company you recognise, such as your bank or an online business you purchase from.

The fraudster will ask victims to transfer money into an account. Whilst this would normally set alarm bells ringing, they often carefully pick their time, so it doesn’t appear out of the blue. For example, you may have organised some building work on your property through email communication. If fraudsters are able to see this, they’ll contact you at a time you’d be expecting to receive an invoice. As payments are often now made in real-time, criminals are able to quickly transfer money, making it difficult to track.

In the past, it has been incredibly difficult for victims of APP fraud to recover their money. However, a voluntary code now offers some protection. The Contingent Reimbursement Model Code launched in May. So far, eight payment service providers have adopted the code, including Barclays, HSBC, Lloyds Banking Group and RBS.

Banking with a provider that has signed the code doesn’t mean you’re guaranteed to get your money bank. They can still choose not to reimburse you in some circumstances. For example, if it’s deemed you made a payment without a ‘reasonable basis’ for believing you were paying for genuine goods and services or if you ignore warnings when updating payee information.

7 ways to reduce the risk of APP

Even with the finance industry stopping two-thirds of fraudulent activity, APP could still leave you financially struggling if you’re affected. Keeping these seven reminders in mind when you’re approached to make a payment can reduce the risk of fraudsters catching you out.

1. Don’t give out any personal details to unverified people
2. Use a strong password for accounts with personal details, such as your email address or online shopping accounts
3. Remember a genuine bank or organisation will never contact you out of the blue to ask for your PIN or password in full
4. Don’t click on links within emails or texts if you’re unsure of the origin
5. Be cautious of unsolicited contact; genuine firms will understand if you have security concerns
6. If in doubt, hang up the phone and try to contact the individual or company directly using a known email address or phone number
7. Don’t be rushed into making a payment if you feel unsure about the communication, take the time to verify the payment

If you believe you’ve been a victim of APP, the first step should be to contact your bank or building society. They may be able to halt the payment and freeze your account to prevent more losses. You can also report the problem to Action Fraud.