Only around £2 in every £5 lost to the convincing scams are reimbursed, Which? found, with victims forced to swallow £495m in losses, equivalent to losing £4.7m a week, or £677,000 a day.
Rocio Concha, of the group, said banks should refund more to victims in cases where they had done nothing wrong, saying existing rules on refunds were “unfair” and applied “inconsistently”.
These scammers dupe victims by posing as someone else in need. Examples include:
- Scammers pretending to be police officers in need of help with criminal investigations
- Family members, such as children in need of money while abroad
- Employers or creditors asking for payments to be redirected to different accounts
- Online love interests claiming they need cash.
The cons are often elaborate, long lasting and involve life-changing sums of money. Such fraud losses increased 71pc in the first half of 2021, surpassing the amount of money stolen through card fraud for the first time.
Crucially, as victims are tricked into playing an active role in the fraud, it is much harder for them to get their money back than it is for other types of financial crime, such as cases where a bank account is hacked or a credit card stolen.
It means banks and financial institutions can more easily deny compensation and claim customer negligence.
A voluntary code of ethics on scam refunds, introduced in 2019, forces banks to pay out where they could have done more to prevent the crime. However, not all providers are signed up and many have been found to be wrongly withholding payouts.
The bank transfer watchdog, the Payments System Regulator, said in December it wanted to make refunds for innocent victims compulsory, with the Treasury vowing to legislate for new rules at “the earliest opportunity”.
Ms Concha said it was “vital” the laws were passed as soon as possible.
