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Fraud victims face ‘reimbursement lottery’ from their banks

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Scam victims are facing a “reimbursement lottery” when they ask their banks to compensate them for their losses, the consumer group Which? has claimed.

Three-quarters of customers who were turned down by their banks and took their cases to the financial ombudsman have been told that they should have received a payout, and the consumer group said with some banks this rose to eight in 10.

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Fraud cases have boomed in recent years, with the pandemic helping criminals to part people from their cash through the use of fake delivery texts and Covid-related messages.

As the number of victims has grown, so has the number of complaints to the Financial Ombudsman Service, which adjudicates on disputes between consumers and financial companies.

In 2020-21, the number of complaints involving authorised fraud – the majority of which involve people transferring cash to scammers – more than doubled from 3,600 to 7,770.

Which? said figures it obtained from the FOS showed that NatWest and Royal Bank of Scotland, which are part of the same group, were being found to have made the wrong decision in 86% of cases.

The group was followed by Santander, with 82% of decisions overturned by FOS. Other major banks also had high uphold rates.

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Most major banks have signed up to a voluntary code stating that they will reimburse customers who have done all they can to avoid falling victim to scams.

However, Which? said a “reimbursement lottery” was leaving many victims facing an uphill struggle to recover their money when they have been targeted by criminals.

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Jenny Ross, Which? money editor, said: “Fraud can have a devastating financial and emotional impact on victims, so it’s shocking that so many banks are failing to handle cases correctly, often wrongly and unfairly denying victims reimbursement.

“It’s clear banks can’t be trusted to make the right decision when it comes to reimbursing their customers who’ve fallen victim to APP scams.”

Which? called on the payments regulator to introduce mandatory requirements for companies to protect customers and treat them consistently, and said there should be a reimbursement obligation on all firms using faster payments.

A spokesperson for NatWest told Which?: “Our proactive stance and relationship with FOS has brought forward the settlement of many of our cases earlier than required … As a result of this our overturn rate for the period is inflated, we do however expect to see this normalise in 2022.”

Santander said: “We have a great deal of sympathy for all those who are victims of the criminals who carry out fraud. We invest a great deal in protecting our customers against fraud, raising awareness of scams and fraud, and work closely with FOS, as well as other industry bodies, to ensure customers are treated fairly.”

Which? found that those who took an authorised fraud complaint to the ombudsman faced waiting an average of nine-and-a-half months to have their case resolved.