Bank transfer scam – how to get your money back

A bank transfer scam can be extremely convincing, and a new voluntary code from banks has been set up to help people who’ve fallen for them.

Bank transfer scam guide

Nobody wants to discover they’ve fallen prey to a financial scam. Some good news though – people who’ve been tricked into transferring money directly to a fraudster now have a new safety net, which should mean they have a better chance of getting a refund.

Some £354 million was lost to bank transfer fraud in 2018 – most of it stolen from personal accounts. Financial providers were able to return £83 million or 23% of the losses – meaning many victims were left out of pocket.

But a new industry code has been put into action, with a funding pot available for blameless scam victims.

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Here’s a look at why the code has been introduced and how it works…

What is a bank transfer scam?

Sophisticated scams have been persuading people to transfer money themselves directly to criminals – only to realise after the money has disappeared that they have been conned. Scams could start with emails, texts and cold calls, and people could be persuaded they are transferring money to a legitimate organisation such as their bank or another business.

Scammers put victims under pressure so they don’t have time to think, in some cases saying they need to transfer money urgently to a “safe” account. People in such situations have transferred large amounts in some cases, and because they authorised their bank to make the transfer, they may have lost their cash for good.

By contrast, in cases where scammers steal money from people’s accounts without their knowledge, blameless victims can generally expect to be refunded.

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So what’s happened now?

The new code has been introduced as part of a wider fightback against this type of bank transfer scam – known as authorised push payment (APP) fraud. It means victims who were tricked into transferring money but took reasonable care are much more likely to get their money back –  even in circumstances where the customer’s bank has also done everything reasonably expected of it to protect the customer.

The industry started to provide initial funding for these “no blame” situations in 2019, with a longer-term funding pot agreed in January 2020.

Is my bank taking part?

The code is voluntary, so not everyone has signed up to it. The banking brands which have committed to implementing the code include Barclays, HSBC UK, First Direct, M&S Bank, Lloyds Bank, Halifax, Bank of Scotland, Intelligent Finance, Metro Bank, Nationwide, Royal Bank of Scotland, NatWest, Ulster Bank, Santander, Cahoot, Cater Allen and Starling Bank.

Meanwhile, TSB has made its own fraud refund guarantee to customers, which aligns with the code but also goes further to cover some situations which may not be covered by other banks.

TSB says it’s finding that, when customers have the peace of mind of knowing they will be refunded, they are opening up about what happened – giving the bank the full picture so it can better protect customers for the future.

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What else is being done to protect people from a bank transfer scam?

A name-checking service called “confirmation of payee” is also in the pipeline. The Payment Systems Regulator (PSR) proposed that the UK’s six biggest banking groups, which are involved in about 90% of bank transfers, fully put the confirmation of payee measures in place in March 31, 2020.

Confirmation of payee works by making sure the name of the account someone is sending money to matches the name they have entered. Alerts will notify the payer when there has not been a match – meaning corrections can be made before the payment is sent rather than people trying to claw the money back after the cash has been transferred.

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How to spot a bank transfer scam

While blameless scam victims should find it easier to get a refund, if you’ve been extremely careless then you shouldn’t expect to get your money back under the code. People still generally have a responsibility to protect themselves before they can expect to be reimbursed. This could include paying attention to any warning signs from their bank, and having a reasonable basis for believing the payment recipient was legitimate.

But the code also acknowledges scams may be so convincing that even someone experienced in making payments couldn’t protect themselves. While the voluntary code provides a new safety net, it’s best to avoid getting scammed in the first place.

So always take time to think and check if you’re contacted out of the blue about making a payment. Report any suspect approaches from people to Action Fraud and tell your financial services provider.

Help to avoid scams is available at takefive-stopfraud.org.uk.