Bank APP scam rejection and possible lax security measures

naedanger

Yes, definitely go to FOS. 
Banks have obligations to help prevent frauds and FOS are upholding a large proportion of complaints in this area. There are plenty of cases where FOS has upheld complaints where COP would have made no difference.
Here is one example, where the customer knew he was paying the money to someone else's account, but when you read the detail it becomes more understandable. 
https://www.financial-ombudsman.org.uk/files/291173/DRN-1951649.pdf
I think when you read the detail of some of these complaints you can see that at least some ombudsmen are fairly understanding of how customers can be manipulated by scammers and so also expect banks to act with reasonable care (so for example not just blindly following tick box exercises to avoid liability) when deciding whether they (the banks) have done enough to help identify and prevent such scams.

eskbanker

I'm certainly not trying to dissuade OP from going to FOS if there's a case to be made that the bank didn't act reasonably or fairly, and the stats posted earlier suggest that the odds are slightly in the customer's favour when doing so (and when all is said and done there's nothing to lose by escalating).  FOS does tend to expect banks to abide by the BSI code referred to in the above example, but that still doesn't necessarily mean that banks will automatically be on the hook for not stopping all out of character and unusual transactions.

I remain convinced that CoP will have an impact on how such cases are assessed by banks and FOS, as it's clearly a proactive and preventative measure that acts to inform and protect customers (as well as reducing banks' liability of course!), but time will tell....

naedanger

eskbanker said:

I'm certainly not trying to dissuade OP from going to FOS if there's a case to be made that the bank didn't act reasonably or fairly, and the stats posted earlier suggest that the odds are slightly in the customer's favour when doing so (and when all is said and done there's nothing to lose by escalating).  FOS does tend to expect banks to abide by the BSI code referred to in the above example, but that still doesn't necessarily mean that banks will automatically be on the hook for not stopping all out of character and unusual transactions.

I remain convinced that CoP will have an impact on how such cases are assessed by banks and FOS, as it's clearly a proactive and preventative measure that acts to inform and protect customers (as well as reducing banks' liability of course!), but time will tell....

I think we are in agreement. 

I am also convinced CoP will have an impact. For a start it should greatly reduce the number of careless mistakes where the amount is paid to the wrong account because of a typing error. And it should also reduce fraud as presumably many current scams won't work and fraudsters will need to come up with more elaborate stories to persuade their potential victims to transfer money into someone unknown's account, and the more elaborate the story hopefully the more likely the customer will realise something isn't right.

And obviously I agree customers will often be found liable either where there was nothing to alert the bank of something out of the ordinary, or where the bank took sufficient action to alert the customer which the customer then failed to heed. 

Bottom line, going to FOS is worth a shot. It may or may not succeed, but there is little to lose from trying. (And put the effort in to make a good argument.)

kaMelo

Whilst not to underplay the impact of APP scams it is reaching a point whereby I wonder exactly what a bank is supposed to do.
The ombudsman has had to deal with many complaints regarding allowing payments through which later turned out to be part of a scam, however it has had to deal with an equally large number of complaints where the banks had blocked what later turned out to be genuine payments. Even with CoP and extra warnings tailored to the specific type of payment you are making, there are still those who believe the customer has no responsibility and the banks should be liable. How many people can genuinely say they have never heard the warnings issued by banks "We will never ask you to move money to a safe account" yet it still happens.
Interestingly the punishment (if that's the right word)  for blocking a genuine payment is far far less onerous on a bank than being instructed to reimburse fraudulent payments. Going forward I would suggest they are more likely to block more payments, knowing this will affect more genuine payments, as an apology with a small goodwill payment is the better outcome for the bank.

The banks simply cannot win, all they can do is protect themselves which will mean a slower and more onerous task with more security steps for everyone who wants to pay someone or something.

eskbanker

kaMelo said:

The ombudsman has had to deal with many complaints regarding allowing payments through which later turned out to be part of a scam, however it has had to deal with an equally large number of complaints where the banks had blocked what later turned out to be genuine payments.

Equally large, literally?  Is that backed up by authoritative stats?

kaMelo

eskbanker said:

kaMelo said:

The ombudsman has had to deal with many complaints regarding allowing payments through which later turned out to be part of a scam, however it has had to deal with an equally large number of complaints where the banks had blocked what later turned out to be genuine payments.

Equally large, literally?  Is that backed up by authoritative stats?

Obviously not, more a wet finger in the air. However a quick search of ombudsman decisions shows over 632 regarding "blocked payments and 238 regarding APP. It would of course require actually reading them all and more to form an authoritative statistical position.
The point I was making was that blocked payments attract large numbers of complaints and the outcome is far less financially damaging to a bank for that type of complaint compared to an APP complaint where the bank is found liable by the ombudsman.
The only natural conclusion I can come to is to expect more blocked payments as a result. 


Edited to add, searching for "app" was not a great choice as it included complaints about apps, duh.  
Searching for authorised push payments returned 22 over the last twelve months and 9 were upheld as opposed to 638 for blocked payments of which 64 were upheld.
Statistically it makes more sense to block payments and argue your case.

naedanger

kaMelo said:

Whilst not to underplay the impact of APP scams it is reaching a point whereby I wonder exactly what a bank is supposed to do.
The ombudsman has had to deal with many complaints regarding allowing payments through which later turned out to be part of a scam, however it has had to deal with an equally large number of complaints where the banks had blocked what later turned out to be genuine payments. Even with CoP and extra warnings tailored to the specific type of payment you are making, there are still those who believe the customer has no responsibility and the banks should be liable. How many people can genuinely say they have never heard the warnings issued by banks "We will never ask you to move money to a safe account" yet it still happens.
Interestingly the punishment (if that's the right word)  for blocking a genuine payment is far far less onerous on a bank than being instructed to reimburse fraudulent payments. Going forward I would suggest they are more likely to block more payments, knowing this will affect more genuine payments, as an apology with a small goodwill payment is the better outcome for the bank.

The banks simply cannot win, all they can do is protect themselves which will mean a slower and more onerous task with more security steps for everyone who wants to pay someone or something.

Yes, customers can expect more checks if they have not already experienced them. What banks could do, if they have not done so already, is to try and set customers expectations accordingly. (If you have an unusually large transaction allow for the fact that it could take longer for the bank to process it, and they may need to contact you before it completes.)

Of course you are correct that they do have to balance different risks and there will always be complaints that they didn't get the balance right in any particular case, but that is usually the case in situations where judgement is required.

However I am less concerned about the fraud prevention checks than some of the anti money laundering obligations. There the bank can be obliged to freeze your account, and not tell you why, which could be a lot more stressful than having a payment held up. (However it is the law, so the banks have no choice in the matter, even if they wanted to.)

Finally any customer who believes they don't have responsibilities may be in for an expensive surprise.

connor0811

Thank you for the replies and it’s interesting reading the debate on it. Yes vulnerability was mentioned in the first letter but I didn’t go into great detail as I didn’t want him to be a sympathy case. It all lies around the circumstances, which I’ve mentioned at the start of the thread but given no details, that lead up to the phone call. I didn’t want to out details of that into here but on second thought as long as no where is named I’m sure there’ll be no harm?

eskbanker

connor0811 said:

Thank you for the replies and it’s interesting reading the debate on it. Yes vulnerability was mentioned in the first letter but I didn’t go into great detail as I didn’t want him to be a sympathy case. It all lies around the circumstances, which I’ve mentioned at the start of the thread but given no details, that lead up to the phone call. I didn’t want to out details of that into here but on second thought as long as no where is named I’m sure there’ll be no harm?

There's no harm in posting significantly more detail than you have, which would perhaps lead to advice about which aspects are and aren't worth mentioning or emphasising in a complaint....

connor0811

eskbanker said:

connor0811 said:

Thank you for the replies and it’s interesting reading the debate on it. Yes vulnerability was mentioned in the first letter but I didn’t go into great detail as I didn’t want him to be a sympathy case. It all lies around the circumstances, which I’ve mentioned at the start of the thread but given no details, that lead up to the phone call. I didn’t want to out details of that into here but on second thought as long as no where is named I’m sure there’ll be no harm?

There's no harm in posting significantly more detail than you have, which would perhaps lead to advice about which aspects are and aren't worth mentioning or emphasising in a complaint....

He made a purchase on a well known online retailer for around £5, minutes later a text message came through about a purchase at a well known bike/car accessory store asking if it was him that made a purchase of £100 (plus loose change) and to reply Y for yes and N for no (if this happened to me I’d of known it was a scam). He replied N and got a phone call from someone saying they were from his bank and he needed to move his money into a new account they’d set up for him. He thought it was too much of a coincidence that the message came through after the purchase and someone had managed to get his details and spent money elsewhere.  Then it was around 5 minutes after this he told me what had happened and when I told him it was a scam he asked if I was sure. The bank do know all this and a couple of police forces are investigating as part of a larger operation (Derbyshire and City of London if memory serves me right). It was also inheritance money he’d not long received and he emptied his full account to them.