The Fraud Reimbursement Lottery – How One Victim Recovered £ 250,000 And Another Got Nothing
Fraud is now so widespread that it should be treated as a threat to national security, according to banking organization UK Finance.
Crime rose 30% to almost £ 754million in the first six months of 2021 compared to the same period last year.
So-called authorized push payment scams, in which victims are tricked into unintentionally transferring money to scammers, have increased by 71%.
One of the most alarming statistics revealed by UK Finance yesterday was the £ 107million lost to investment scams in the first half of this year, almost double that of the same period in 2020 .
The human cost of this pandemic of crime is heartbreaking distress, as victims realize that they have lost everything and that their only hope is to be reimbursed by their banks.
It may look like a lottery, with only 42% of victims reimbursed.
A distraught saver contacted me in April after falling in love with a clone of finance giant Axa.
Brian Wilson initially invested £ 100,000 in what he believed to be Axa Savings Bonds at 2.2% interest. He said: “It’s a good name and I didn’t worry about them.”
Having no reason to believe anything was wrong, the 86-year-old then asked his bank in Barry, south Wales, to transfer a further £ 150,000.
He began to fear that his money had been stolen when the phone number he was calling was disconnected. Then he found an earlier story of mine warning about the Axa clone.
“I read your article about the lady who got ripped off for £ 70,000, your account is virtually identical to my experience,” he said.
“I’m sorry to burden you with my problems, but I would appreciate your help here.”
I gave Mr. Wilson some advice on how he might appeal to his bank citing the voluntary code called the Conditional Repayment Model. Under this, victims of sophisticated frauds should be reimbursed unless they have been negligent, such as ignoring warnings.
I was delighted when I was told earlier this month that he had recovered all of the £ 250,000.
“I wrote to the bank quoting you verbatim and explaining how I got caught, I am now happy to tell you that I have been fully refunded,” he said.
A spokesperson for his bank, NatWest, said: “Criminals are using increasingly sophisticated techniques to scam customers. We recommend that you be careful when trying to find an investment through a Google research, because the ads can lead to fraudulent sites.
Unfortunately, I did not have this chance to help a client from Santander.
Raymond Egerton, a retired automotive engineer who is in poor health, has no computer, so asked a friend to help him find refuge for his savings.
Sylvia Robinson searched online and came across a Goldman Sachs bond apparently paying 4% interest, a much better rate than the banks offered, but not high enough to arouse suspicion.
Raymond received a professional looking brochure stating that all savings would be protected by the Financial Services Compensation Scheme and covered by an insurance policy “regardless of how much you choose to invest”.
He visited his Santander branch in Stafford in May last year and transferred £ 106,000.
A combination of illness, lockdown, and not having a computer meant it wasn’t until this year that he realized his money was gone.
The website he had dealt with turned out to be a clone of the real thing and the emails from one address ending [email protected] were sent by criminals.
His attempts to get the money back from Santander were unsuccessful and his son Mark intervened, complaining in April that it had been 10 weeks since they heard from the bank and his emails had not received a response.
“My father is fragile and the apparent failure to move this case forward adds to his distress,” Mark wrote.
I asked Santander to review the case and now she has come to a conclusion, but not happy. The bank said Mr Egerton would not be reimbursed because he ignored advice given by a member of his branch staff during a “scam chat”.
“We have the greatest sympathy for Mr. Egerton and all those who fall victim to the criminals who commit these scams,” said a spokesperson.
“Unfortunately, despite Mr. Egerton’s warning about investment scams before making branch transactions, he confirmed that he was happy to make the payments.”
Mr. Egerton is adamant that no “fraudulent conversation” has taken place in the branch.
“All that happened was I said I was putting this in Goldman Sachs at 4% and the woman at the bank smiled and said ‘You’re lucky, that’s good’ “, did he declare.
“That’s all that was said, nothing more, they’re trying to put me off.” His friend, Mrs Robinson, was with him at the bank at the time and supports his version of events by stating: “There was no ‘fraudulent chat’.”
Santander also argues that Raymond should have checked the Financial Conduct Authority website, where he allegedly found a warning about a Goldman Sachs clone in its consumer alerts section.
Truly? Mr. Egerton doesn’t use computers and even if he did, is it fair to expect the average saver to know about FCA and its consumer alerts?
“It’s my savings that are gone,” he told me.
“What this means is that instead of using the electric fire, I stored wood by the back door so that I could stay warm during the winter and stopped riding my scooter, I can’t afford to put it on the road. “
I suggested that he take the matter to the Financial Ombudsman Service.
In the last fiscal year, it received 7,770 new complaints from people who had been refused refunds by their banks after being tricked into transferring money to crooks, more than double the figure for the year former.
The Mediator ruled in favor of the clients in 73% of the cases.
Paul Lewis, BBC Radio 4’s Money Box presenter, said yesterday: “If the banks were to reimburse everyone, they would do much more to stop this crime.
Katy Worobec, managing director of economic crime at UK Finance, said tackling fraud requires the cooperation of other bodies, including government, telecommunications companies and social media.
“It really requires a collaborative approach because of the way scammers target their victims. There is no hope that the banking industry will solve this on its own, it really cannot, ”she said.