Bosses at one of Britain’s biggest banks say that a quarter of all fraud victims who are tricked into transferring their money to scammers will not be reimbursed under government plans.
TSB is urging the Payment Systems Regulator (PSR) to reconsider its proposals, due to become law in the spring, which would mean banks not having to refund anyone who loses less than £100 to tricksters. The bank also wants victims not to have to pay an excess of £35 for every claim they make.
With the exception of TSB, which guarantees to refund its customers who are tricked into transferring money, the banking industry has for years resisted calls to be made liable for people’s losses. Banks say that some victims are reckless when transferring their money and that technology giants such as Meta and Google should be made jointly liable to stop fraudulent websites paying to display scams on their platforms.
However, many fraud victims claim that they were being accused of carelessness or negligence by banks trying to avoid liability. The latest figures from UK Finance, the industry body, showed more than £100 million defrauded from customers in the first half of last year was not refunded — 44 per cent of all losses.
Now, under the PSR’s measures, which are included in the Financial Services and Markets Bill, victims will get their money back — apart from in exceptional cases — as long as losses are above £100.
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However, in a letter sent to Chris Hemsley, the managing director of the PSR, TSB pointed out that a quarter of all frauds were below £100.
Although this equated to only about 1 per cent of frauds by value, the bank urged the regulator to reconsider the plans.
TSB, which examined its own data, said more than one in ten cases under the £100 threshold relate to vulnerable victims paying an advanced fee to access loans they desperately need but which do not exist.
It said that younger people would be most severely affected by the restrictions because more than half of victims in this category would be aged between 20 and 40.
Paul Davis, the director of fraud prevention at TSB, said: “Many people simply cannot afford to be losing £100 to fraud, especially in the current economic climate, and deserve to be protected from increasingly complex scams that often take place on social media.”
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The latest UK Finance figures show the impact of a growing epidemic of fraud in recent years, with scammers using convincing emails, websites and phone calls to trick victims.
Fraudsters typically get people to transfer their money by impersonating official figures, such as the police or the tax office, or by persuading them to buy non-existent goods or take out fake investments through the internet.
The figures show that only £140.1 million of stolen money — or 56 per cent — was refunded by banks to customers in the first half of last year, up from £131.9 million the previous year.
Broken down, of the £249.1 million lost in bank transfer fraud, £90.5 million was taken by criminals who impersonated authority figures, while £61.2 million was lost to investment scams.
While purchase scams were the most common type of transfer fraud, accounting for 53,782 cases — or 56 per cent of the total — they accounted for a smaller amount of losses, at £31.1 million.
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Google and Meta have both cut fraud on their platforms by introducing tougher checks on websites over the past year.
A PSR spokeswoman said: “Under our plans, banks will be required to reimburse the majority of customers who have fallen victim to APP [authorised push payment] fraud. This is likely to be a significant increase on current reimbursement rates which are around 56 per cent.
“In line with protections for other payments and financial services, we have consulted on proposals which would see a minimum standard of protection across the board, where banks may put in place a minimum threshold of £100 and an excess of no more than £35.
“However, banks can of course go much further by choosing to pay the whole amount of every claim.”
