By Trevor Clawson.

In the BBC television series Hustle, a gang of confidence tricksters are depicted as loveable rogues who target only the corrupt and greedy. “You can’t con an honest man,” was the mantra for the show. In reality, honest men and women are being conned every day by groups of criminals who are very much the opposite of lovable.

And as new research from financial services industry trade body, UK Finance reveals, bank account fraud – much of it carried out by means of simple confidence tricks – cost Britons more than £500 million in the first six months of 2018.

As UK Finance points out, bank account fraud falls into two broad categories –  namely, authorised and non-authorised.

In the case of non-authorised scams, money is stolen without any participation on the part of the victim. For instance, a criminal might transfer cash using stolen account details.

So-called authorised push payment (APP) frauds are different. In these cases, an individual is duped into personally transferring cash or making some kind of a payment. And because the victim has self-authorised the transaction, banks have traditionally been very reluctant to offer compensation.

In their view, the injured party should have been more careful. It’s a bitter pill for someone who has been at the wrong end of a fraud. So should banks be doing more to help their customers?

Significant Losses

According to UK finance, out of the £504 million lost to fraudsters between January and June this year, £145m was attributable to ‘authorised push payments’, meaning that victims were essentially conned, often by persuasive individuals talking directly to them on the phone.

It works something like this. A bank customer gets a phone call, supposedly from a bank, a police officer or a supplier of services, such as a utility. The caller says the victim’s bank account has been frozen because of a suspected fraud and that funds should be transferred into an alternative account.

The funds in question might amount to two or three thousand pounds sitting in a current account a few days after a salary has gone in – disastrous enough – but many people are tricked out of much more. In fact,  UK Finance says the average loss stemming from a scam involving a caller pretending to be a bank or police officer is £11,402.

Alternatively, the fraudster might be selling goods that don’t exist. A common fraud is to invite victims to compete in auctions for non-existent goods. Or it might be as simple as a fraudster setting up a fake holiday home site and taking payments.

Social Corrosion

UK finance says such frauds are corrosive to both the wealth and self-esteem of those who fall victim but also to society as a whole.

“Frauds and scams pose a major threat to our country,” said Katy Worobec, Managing Director of Economic Crime at UK Finance.

“The criminals behind it target their victims indiscriminately and the proceeds go to fund terrorism, people smuggling and drug trafficking, even if the victim is refunded. Every part of society must help to stamp out this menace.”

There is some good news. UK Finance says that banks succeeded in preventing frauds valued at £705 million in the first half of the year – or to put it another way, for every £2 stolen, banks prevented the theft of a further £3.00.

Worobec attributed that success to an increasing commitment to anti-fraud measures.

“The finance industry is fighting back,” she said. “It is investing millions in security systems and cyber defences to protect customers. We have brought in new standards to ensure that scam victims get the help they need from their payment providers. And we are supporting law enforcement in disrupting criminals and freezing stolen money.”

Payment Fraud Costs Customers £500 But Are Banks Playing Fair?

Vigilance Required

All well and good, but according to Sarah Armstrong-Smith, Head of Continuity and Resilience at Fujitsu – a specialist in financial services systems –  increased security is not enough to solve the problem. Public awareness is key.

“Many financial services organisations, security firms, and online retailers are doing their best to protect people from scams, but at the end of the day it comes down to individual vigilance,” she says. “You can have the best technical protection mechanisms in place, but without the person being aware of scams, the technical protection mechanisms will not always work.”

As Armstrong-Smith sees it, lack of public awareness and vigilance is not only making individuals vulnerable to fraud, it is also fuelling a wave of crime.

“The entire British public, who have shown an appetite for more convenience and quick transactions through services such as online banking, which has fuelled the rise in fraud and increased exposure to risk,” she said.

But while the truth of what Armstrong-Smith says is hard to deny, in the case of authorised payment fraud, there is another factor at play. Victims are not losing out simply because they have been careless with their data or credit card details. They are being defrauded because very credible criminals are convincing them that a request to transfer money from one account to another or make a debit card payment is a completely legitimate transaction or a necessary action to (ironically) prevent fraud.

Better Protection

Until now,  authorised push payment victims have found it very difficult to secure refunds from banks, a situation that the Consumers Association condemned when responding to the UK Finance report.

“Bank’ 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, “ said Gareth Shaw, a Which magazine money expert.

But there is some hope that in future victims will find it easier to get their money returned. The Payment Systems Regulator has put in place a new code, which will require the Financial Ombudsman to take into account a wider range of circumstances when determining if defrauded customers have the right to a refund. The code came into force this month, it is too early to assess its impact and whether it will truly lead to a better deal for fraud victims.

In the meantime, the public and businesses can protect themselves by taking greater care when receiving suspicious calls, says UK Finance.

“In particular, no one should assume that a call from a bank, police station or company is authentic. And no one should be rushed into making a payment or transferring cash. Legitimate companies will not mind waiting while checks are made,” says UK finance.