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RACHEL RICKARD STRAUS: Banks must reimburse online fraud victims

Good news: All fraud victims who are tricked into sending their money into online scams will be refunded within 48 hours

RACHEL RICKARD STRAUS: Good news that the Payment Systems Regulatory Authority is offering banks to reimburse fraudsters who are victims of online scams within 48 hours

We needed a bit of good news last week amid the gloom. Thankfully, it did emerge, in the form of a momentous but barely noticed report released on Thursday.

All victims of fraud who are tricked into sending their money into online scams will be refunded within 48 hours, the payment systems regulator (PSR) has proposed.

The regulator predicts that its new rules will see more than 95% of victims of bank transfers reimbursed, compared to 49% currently.

Good news: All fraud victims who are tricked into sending their money into online scams will be refunded within 48 hours

Good news: All fraud victims who are tricked into sending their money into online scams will be refunded within 48 hours

Banks will have to reimburse victims unless they suspect they were involved in the crime or were grossly negligent. All losses between £100 and £1 million will be refunded. Banks will be able to charge victims a fee for this, but no more than £35.

The cost of reimbursement will be shared between the victim’s bank and the bank to which their money is fraudulently sent. Putting receiving banks on the hook should prompt them to do more to stop fraudsters from opening accounts in the first place.

These new rules cannot be implemented soon enough. They are currently being consulted, but are unlikely to come into force before next year. Fraud is already the biggest contributor to crime in the UK and this type of scam is growing rapidly. Victims lost £583million there last year, an increase of 39% in just one year.

This is one of the most terrifying and life-changing types of scams in which victims can lose their life savings in an instant. It is also deeply pernicious. In many cases, fraudsters spend days or even weeks befriending their victim and gaining their trust.

They might tell them they’re from the police, their bank’s fraud department, or even a potential love interest. They make up stories to convince their victim to hand over their money. The emotional impact of this kind of betrayal can be devastating.

I have spoken with countless victims who have been abandoned by their bank and told they were to blame or their money was missing and nothing could be done. Now, finally, banks will have to accept – as we argued in our Nail the Scammers campaign – that these scams are sophisticated, involve social engineering and that the victims cannot be blamed.

The PSR will also require banks to share information with each other to track down and arrest scammers, and publish data on which banks are reimbursing their customers – and which are late.

I suspect the new rules will also encourage banks to make it easier to report fraud. If left out if a scammer wins, that should motivate banks to pick up the phone instead of leaving terrified victims waiting. The proposals are great news. But I feel for the victims of scams who have already lost their savings and will not benefit. They might just feel vindicated – the new rules prove they were never to blame. But that’s little comfort when you’ve been robbed.

I asked the PSR about existing victims, but they said they couldn’t apply the rules retrospectively. Still, I think it’s worth victims returning to their banks armed with knowledge of these new rules – and to the Ombudsman if their banks still refuse to help them.

Many more people will be victimized before the new rules come into force – they also need to be protected.

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