Are the banks doing enough to protect consumers against fraud?

Fraud is an ongoing concern for consumers. The financial sector in particular has a major problem with customers’ being scammed, and according to the latest research, consumers in the UK had around £503.4million stolen in the first half of this year. According to the research, which was carried out by the financial services industry itself, institutions’ efforts to address the issue of fraud have been “woefully insufficient.”

Some of the most common methods of fraud include impersonating a trusted organisation, like the police; or, some customers’ are being scammed into paying in advance for services and products that don’t actually exist. UK Finance, the trade association for financial firms, has issued new warnings for consumers to be cautious when buying products, especially on social media and auction websites.

Impersonation scams are also still a problem in the UK. The research shows that between January and June, there were 3,866 reported cases of this type of fraud. Some examples would include criminals pretending to be from a bank, financial institution, or even the police, claiming there has been fraud on the account. They then trick the victim into transferring money; this is also known as authorised fraud and the victim has given their permission for the transfer. The average loss for these crimes are £11,402.

According to Katy Worobec, managing director of economic crime at UK Finance, fraud is still a “major threat” in the UK. “The criminals behind it target their victims indiscriminately and the proceeds go on to fund terrorism, people smuggling and drug trafficking, whether or not the individual is refunded. Every part of society must help to stamp out this menace, especially by stopping the data breaches which increasingly are fuelling fraud.”

“The finance industry is committed to fighting back, investing millions in security systems and cyber defences to protect customers. We have brought in new standards to ensure scam victims get the help they need from their payments provider; we are supporting law enforcement in disrupting the criminals and freezing stolen money; and we are assisting the government in improving intelligence sharing to extinguish the threat”, she said.

Although the banking and financial industry claim they have stepped up in the fight against fraud, claiming that it’s prevented hundreds of millions of pounds worth this year, consumer group Which? says that they still need to do more. They recently made a “super-complaint”, saying that the figures being seen and “shocking”, and there’s still not enough protection for consumers’.

Money expert from the consumer group, Gareth Shaw, said: Banks’ efforts to date have been woefully insufficient and they have not done enough to protect their customers, who continue to lose life-changing sums of money to ever-more sophisticated crooks. The Payment Systems Regulator has rightly committed to introducing a reimbursement scheme for victims. It’s about time that banks step up and properly compensate customers who have lost money through no fault of their own.”