Bank transfer scams have become increasingly common in the UK in recent years with the shift to online banking and the digitisation of many banking services. According to a new report by Which?, this type of scam has become so prevalent that victims are now losing a staggering £28,000 per hour.
In this article, I take a look at how bank transfer scams work, how to protect yourself and what to do if you believe you’ve been scammed.
What is a bank transfer scam?
A bank transfer scam, also known as an authorised push payment (APP) scam, is a type of scam in which you either knowingly or unknowingly transfer money from your own bank account to one belonging to someone else (in this case, a scammer).
The scammer might contact you pretending to be a member of your bank’s fraud team. They might tell you that you need to transfer your money to a ‘safe account’ because your current one has allegedly been ‘compromised’.
Alternatively, they may impersonate someone you know. They might then contact you via text or WhatsApp with a financial problem, and ask you to help them out by transferring money from your bank account to one that is under their control.
What are the current stats on bank transfer scams?
According to an analysis of UK Finance figures by Which?, UK consumers lost a total of £854 million via 306,573 cases of APP scams between July 2019 and June 2021.
Of this, 58% of cases have not been resolved, meaning £495 million has not been reimbursed to victims. This has left them shouldering net losses at a rate of £4.7 million a week, £676,881 a day, or £28,203 an hour. It means that customers lose more money to bank transfer fraud every hour than the average employee earns annually (£25,971).
The low rate of reimbursement comes despite most banks actually being signed up to the Authorised Push Payment Scam Code. This is a code that basically instructs banks to compensate all victims of APP fraud and to provide them with adequate support.
Unfortunately, according to Which?, this code is currently not working as it should. Which? says the code has often been applied inconsistently or wrongly by a lot of firms. This has left many bank transfer scam victims with an uphill battle to recover their money.
As a result, Which? has urged the government to expedite its plans to compel banks to reimburse victims.
How can you protect yourself?
The simplest way to avoid becoming a victim of bank transfer fraud is to never send money to anyone you haven’t met in person to verify their identity, no matter how convincing they might be.
If, for example, you receive a call from someone claiming to be from your bank and asking you to move your money to a supposedly ‘safe account’, pause and think before you act.
A scammer might try to rush you and scare you by saying that time is running out to take the action they want you to take. A genuine organisation would not do that and would be more than willing to wait.
If something doesn’t seem right, cease communication with the suspected scammer immediately. Instead, call your bank using their official number to clear things up and avoid becoming a victim.
What can you do if you’ve been scammed?
If you have fallen victim to such a bank transfer scam, it’s important that you act quickly.
Your bank or financial provider might be able to trace and possibly retrieve any transferred funds. So as soon as you identify a problem, call them and explain what’s happened. Provide all relevant details, including the bank name and account number to which you may have transferred the funds.
If your bank is unable to trace or retrieve your money, you may be eligible for reimbursement if the bank is registered with the Authorised Push Payment Scam Code. However, bear in mind that there are many systemic issues with the code at the moment. That means that getting your reimbursement might not be an entirely smooth process.
If your bank isn’t a member of the code, you might still be able to get your money back. But it might be a little more difficult.
Your bank might refuse to reimburse you, citing gross negligence on your part, for example. Or they could say you authorised the transaction by giving a scammer details of your account. However, the bank must provide proof of this.
If you are dissatisfied with your bank’s reimbursement decision, you can file an official complaint with them. And if that doesn’t work out, you can escalate the matter by taking it to the Financial Ombudsman. Be prepared to wait, however, if you go this route as it could take several months to get a decision.