Online shopping scam victims will still be covered by anti-fraud code

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Victims who lose hundreds of pounds in online shopping scams will continue to be covered by an anti-fraud code after banks’ calls to water down protections were rejected.

The watchdog which oversees the authorized push payment scams code, signed by nine banks, said purchase scam victims should continue to have losses reimbursed in cases where they were blameless.

Some banks have called for these scams to be excluded from the code as victims lose less money on average and cases take ‘a disproportionate amount of time to assess’, a review said, with banks wanting to focus on ‘customers who have suffered larger monetary losses.’

However, even those who lose larger sums appear not to be properly protected, as banks have reimbursed victims of push payment fraud in just 41 percent of cases victims who lose hundreds of pounds in online shopping scams will continue to be covered by an anti-fraud code after banks’ calls to water down protections were rejected.

The watchdog which oversees the authorized push payment scams code, signed by nine banks, said purchase scam victims should continue to have losses reimbursed in cases where they were blameless.

Some banks have called for these scams to be excluded from the code as victims lose less money on average and cases take ‘a disproportionate amount of time to assess’, a review said, with banks wanting to focus on ‘customers who have suffered larger monetary losses.’

However, even those who lose larger sums appear not to be properly protected, as banks have reimbursed victims of push payment fraud in just 41 percent of cases

But while the £37.2million lost in these online shopping scams between May 2019, when the code was introduced, and July 2020 accounted for just 14 percent of the £257million lost to push payment scams in total, they made up 59 percent of cases.

The Lending Standards Board said a significant number of people would be left unprotected and said it was ‘not persuaded that purchase scams should be excluded from the Code simply on the basis that they represent the highest volume of cases being assessed.’

The decision, which echoed comments made by the LSB to This is Money a fortnight ago, is a blow to the banks that had attempted to lobby the watchdog to remove purchase scam protections from the anti-fraud code.

While banks’ submissions to the 32-page review released on Thursday morning were kept private, the founder and chief executive of Starling, Anne Boden, had previously said in a blog post that reimbursing victims of this kind of scams, which often see shoppers tricked into buying non-existent goods through adverts on social media platforms, ‘is not what the code was intended for.’

She said 45 percent of purchase fraud involved losses of less than £300.

A spokesperson for UK Finance said: ‘Fraud has a devastating emotional impact on victims and its proceeds fund serious organized criminal activities which damage our society. The banking industry’s primary focus is on stopping fraud from happening in the first place.

‘We will work closely with the Lending Standards Board on its recommendations to improve the voluntary code and ensure it is as effective as possible in protecting customers and preventing fraud.

‘UK Finance continues to believe that legislation on APP fraud is needed to make the code mandatory across all providers and drive more consistent outcomes for consumers and firms.

‘This should be combined with a stronger regulatory framework to ensure technology firms and other businesses take action to stop criminals exploiting their platforms to commit fraud.’

Seven deadly scams
Victims lose hundreds of millions of pounds to push payment scams every year.

As well as making it easier, in theory, for victims to get their money back, the APP code introduced at the end of May 2019 is also designed to prevent these types of scams from happening in the first place.

These scams are divided into seven major categories:

– Purchase scams: Where the victim pays in advance for goods or services that are never received.

– Investment scams: Where the victim pays for a fake Investment that offers high returns.

– Advance Fee scams: Where the victim pays a fee which they believe will result in the release of a much larger payment or high-value goods.

– Romance scams: Where the victim pays money to a person they believe is romantically involved with them.

– Impersonation scams: Where the victim is contacted by the scammer who pretends to be from the police or the victim’s bank and convinces them to make a payment to a ‘safe’ account owned by the fraudster or to pay a non-existent fine.

– Invoice scams: Where the victim attempts to pay an invoice to a legitimate payee, but the scammer intervenes to convince the victim to redirect the payment to the scammer’s account.

– CEO scams: Where the victim attempts to make a legitimate payment but the scammer intervenes by impersonating the CEO or other senior executive of the victim’s organization to convince them to redirect the payment to the scammer’s account.

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