TSB, Nationwide and HSBC best at reimbursing fraud victims - with others far behind

Newly released data has exposed a concerning discrepancy between the best and worst banks in terms of reimbursing fraud victims and preventing criminals from exploiting accounts.

The Payment Systems Regulator (PSR) has, for only the second time, published industry data from the 14 largest banking groups in the UK.

This data reveals the banks least likely to reimburse their customers, as well as the payment firms failing to stop the proceeds of bank transfer fraud from reaching their accounts. Which? research has consistently highlighted the reimbursement lottery victims face, and we've been leading the charge for a mandatory scheme, set to come into effect from 7 October 2024.

Banks and payment firms are obliged to report data related to authorised push payment (APP) fraud, also known as bank transfer scams, to the PSR. It's vital that these figures are made public, to expose the worst performers.

Overall, reimbursement has increased from 61% in 2022 to 67% in 2023, but for the second year running the three firms that reimbursed the least were Monzo (reimbursing 17% of losses), Danske Bank (13%) and AIB (9%). None of these are signatories of the CRM Code.

TSB leads the pack in reimbursing customers for losses, with 88% of losses returned, followed closely by Nationwide at 87%, and HSBC/First Direct at 76%. This reflects the top three from 2022.

The majority of these scams start with impersonation, such as pretending to be your bank, the police, an investment company, or even your solicitor. Other scams involve fraudsters selling non-existent goods online and asking for payment via bank transfer, which means you can't use chargeback or Section 75 to protect card payments.

Scammers may persuade you to move your money to a 'safe' account, or authorise a transaction for some dubious reason. In reality, you are transferring money to an account controlled by the scammer.

The PSR has also released data showing how much money is received into fraudsters' accounts as a result of APP fraud (covering money sent from accounts held with the 14 largest banking groups to any payment firm).

Smaller payment firms received disproportionately higher rates of cash from APP fraud than larger, more established banks, suggesting weaknesses including poor detection of mule accounts that were exploited on a large scale by criminals.

Skrill (a digital wallet similar to PayPal) has a scam rate almost double that of the highest-receiving firm in 2022, and at least four times higher than any other firm in the top 20.

Skrill has stated that it believes the scams are linked to a digital wallet provided to a former client, with whom they no longer conduct business. They claim there has been a significant reduction in APP scam levels since this occurred.

Rocio Concha, Which? director of policy and advocacy, said: "The PSR's report acknowledges levels of performance vary hugely depending on which bank a consumer uses, so while there have been some improvements, fraud victims are still facing a reimbursement lottery and some firms are clearly way off the pace."

"The government and the regulator have faced heavy lobbying by sections of the industry to push back against the new mandatory reimbursement scheme, which will see the vast majority of scam victims get their money back. Today's figures clearly show these new rules cannot come soon enough and must not be delayed."

"Consumers are being targeted by highly sophisticated scams, which they can often do little to protect themselves from. The UK is in desperate need of these protections that have been years in the making and will play a vital role in the fight against fraud."

In response, AIB NI said: "We're committed to protecting customers from fraud, making them aware of the latest scams, educating on the best ways to keep their money and details safe, as well as supporting them if they do fall victim to fraud.

"The Payment System Regulator's report shows that AIB has the lowest level of authorised push payment (APP) fraud per million of transactions, with our customers impacted the least. This is in part due to the level of protection and support we have in place.

"We investigate APP fraud thoroughly on a case-by-case basis to best understand the root causes and protect our customers from such scams in the future. This goes hand in hand with our wider fraud preventive measures which saw us refund 100% of customers in cases of 'unauthorised' fraud last year."

Rich Bromley, director of fraud at Monzo, stated: "Our priority is to stop fraud before it happens - and it's working. We've stopped 55% more fraud since this time last year because of our commitment to building and leveraging best-in-class technology while hiring top experts to keep our customers' money safe.

"Our customers are disproportionately affected by purchase scams, 66% of which originate directly on social media - yet these platforms bear no responsibility for preventing fraud or providing reimbursement for money lost. They need to take decisive action like we are to protect consumers from losing money to criminals."

Danske Bank told Which?: "We take fraud very seriously and we're continually investing in measures to further protect customers and indeed wider society from the impacts of fraud, part of which includes speaking to customers regularly about scams and how they can protect themselves.

"We provide payment advice messages in the payment journey and provide customers access to the confirmation of payee system in all our payment channels to allow customers to make informed decisions about the payments they make. Through these preventative measures we continue to see a comparatively low number of cases where our customer fall victim to APP scams.

"This however does not mean we can be complacent and as fraud evolves so does the fight against it. In addition, we're working hard to implement changes required to deliver the new mandatory reimbursement requirement coming in October 2024."

What does the banking industry say?

Ben Donaldson at UK Finance said: "The financial services sector invests more in countering fraud than anyone else and is the only sector that reimburses victims. Today's data from the PSR shows reimbursement increased and the majority of authorised push payment (APP) fraud is reimbursed.

"Reimbursement is important in the fight against fraud, but it does not solve the problem on its own victims still suffer the same psychological impact and criminals still get the stolen money, which causes further harm to society.

"Our focus has to be protecting consumers in the first place and that means looking at where fraud originates. Our data shows that over 90% of APP fraud starts online or over the phone, through social media, fake messages and calls."

Ben Donaldson at UK Finance said: "Despite this, the technology and telecommunications sectors bear no responsibility for reimbursing victims. That needs to change and these sectors also need to tackle the criminal activity that proliferates on their platforms, sites and networks."