Lloyds Bank, Monzo and Starling refund less than half of the money lost to scams. This is according to a shocking new ranking that shames banks by name and leaves their customers in the lurch.
For the first time, banks have been ranked based on the rate at which they compensate victims of fraud.
The report published yesterday by the Payment Systems Regulator (PSR) shows a dramatic gap between banks’ willingness to refund.
Of the 14 largest UK banks, Monzo customers are the most likely to fall victim to fraud but are the least likely to receive a full refund. The online bank only pays out 6 percent of victims in full.
Until now, banks have refused to disclose what percentage of customers receive a full refund. There is currently no uniform standard across the industry as banks are not required to compensate for losses from fraud.
Rankings: For the first time, banks have been ranked based on the rate at which they compensate victims of fraud
Because each bank has its own rules, Money Mail often hears from victims who get their money refunded from one bank but not another. The PSR’s new report makes the extent of the inconsistencies clear.
TSB customers are the most likely to get their money back if they have been scammed: 94 percent of those who report a scam in 2022 will receive a full refund and 4 percent will receive a partial refund. Overall, 91 percent of all funds lost due to fraud are refunded.
Nationwide will each reimburse HSBC and Barclays between 70 and 78 percent of the money lost, with Nationwide paying 91 percent of customers a full refund. Beyond that, however, reimbursement rates decrease.
Santander and NatWest only pay out 63 percent and 62 percent of all fraudulent funds respectively.
The worst of the five largest British banks is Lloyds, which refuses to refund more than half (51 percent) of the money lost.
Allied Irish Banks, which has more than 3.2 million customers, is the worst offender of all, providing refunds in just 12 percent of cases and refunding 10 percent of all money lost.
This is followed by Danske Bank and Monzo, which only offer 7 and 6 percent of defrauded customers a full refund and 10 and 8 percent a partial refund.
The PSR notes that 141 out of every million Monzo transactions in 2022 were sent to fraudsters – the highest rate of any largest bank.
Rocio Concha from consumer campaign group Which? says: “These numbers confirm what we have long suspected – that some companies would rather point the finger at innocent victims than take responsibility for customers losing money at the hands of sophisticated fraudsters.”
Monzo customer Rebecca Hyde, 51, from Bath, was the victim of a “push payment” scam that left just £4 in her bank account in April.
She says Monzo “boldly” refused a refund when she reported the fraud and closed her account without compensation.
It was only when Rebecca lodged her complaint with the Financial Ombudsman Service that she received a full refund as the financial arbitrator concluded that her bank had wrongly denied her compensation.
Many banks refuse to pay out if customers have ignored warnings on the internet or on the phone. But scammers have learned to ignore such warnings
Rebecca, a self-employed cleaner, says she received a call in April from a man called James who said he worked at Monzo and was calling to report suspicious activity on her account.
She says she didn’t give him any personal information but followed his instructions to push through a notification on her phone and then turn it off. At the time, a co-op store in London was billed £2,193. “I had to fight because Monzo said I had cheated myself,” she says.
Many banks refuse to pay out if customers have ignored warnings on the internet or on the phone. But scammers have learned to ignore such warnings.
Paul Davis, director of fraud prevention at TSB, says it’s time for customers to see the level of fraud refunds provided by their bank – which TSB has been publishing for four years.
Starting next year, new rules will require banks to reimburse all victims of “authorized push payment” scams within a week of reporting the incident.
They typically happen when a victim is tricked into transferring money to a scammer pretending to be from an organization such as a bank or a family member or friend.
Both Lloyds and Monzo say they have invested heavily in prevention systems. Ashley Hart, director of fraud and disputes at Monzo, said: “Being a victim of fraud is extremely distressing. “Our focus is on preventing this from happening in the first place.”
Liz Ziegler, fraud prevention director at Lloyds Banking Group, said: “Protecting our customers from fraud is our priority and more than 80 percent of our customers receive a refund, including two thirds of victims who receive a full refund.”
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