Why do some banks help scammers?

Hypervigilante

1. When you approve a payment via your bank app for a specific sum, why does the bank algorithm not have an alert when a much higher, unauthorised amount is taken by the retailer? Why don't they require you to re-authorise the larger sum? It seems that authorising a small sum effectively opens your account for potential misuse and fraud by the retailer, and/or addition of unlawful upsales charges to your credit card without any notice to you, the account holder.
2. What do the banks refuse to cancel a credit card transaction when it's been immediately reported and evidenced as a fraud?
3. Why do banks keep a credit card debit 'pending', when it's been reported as fraudulent and cancelled with the retailer before dispatch of any goods? Why do they allow the retailer to withdraw the disputed sum ad infinitum when it's been flagged as fraud?
4. Why do bank fraud departments close investigations after only 7 days if the 'pending' sum has not been taken by the retailer, yet allow the retailer to take that sum on day 8, or any day following, in spite of the account holder having cancelled the transaction and reported it as a fraud? Any scammer only needs to wait until day 8….

I ask these questions because of the following: I attempted to make a simple purchase from an online company and was directed to my bank's app to authorise the payment of £32. After approval of £32 I was redirected back to the retailers checkout and was offered a number of 'upsell' packages. I declined each one. The email confirmation a couple of minutes later showed they had charged me £92 and had unilaterally added two extra items which I had specifically rejected. I immediately emailed them to cancel the order and received a Bot response claiming that the package had already been despatched 'some hours ago'. Their T and C's state that cancellation is possible until you receive an email confirming the processing and despatch of goods. Obviously I hadn't had that email, but I did receive a further email some 5 hours later from the purported 'co-founder' offering more upsales which could be added to my order and dispatched all together. So, clearly nothing had been processed or dispatched. It was also a weekend. I sent a further 6 emails confirming cancellation and identifying their mistaken/fraudulent activity and the unauthorised and unlawful charges on my credit card. As soon as the bank opened I called and reported the fraud. They refused to cancel the transaction in spite of my basic consumer rights to do so within 14 days of an online purchase, let alone that I had evidenced the fraudulent activity in the emails and screenshots of the checkout process. They explained that they had already transferred the full sum of £92 and could not cancel it. The bank could not explain nor justify how an unauthorised 'request for credit' by a third party on my credit card account could not be stopped or rectified. They also could not justify why they would allow the retailer an open ended option of withdrawing the funds.

I cancelled the card and am pursuing the retailer. However, the real issue is that I'm not alone in having unlawful debits on my credit card by companies based abroad. The banks could easily protect their customers accounts and best interests. Yet, in this instance, they very much favour the scammers.

Woodstok2000

This sounds strange, Ive never been directed back to the checkout after a bank app appproval, it always g pops up as the last step. Which bank is this? Did you pay direct on your card, or via PayPal (or similar)?

eskbanker

In terms of not cancelling 'pending' transactions even when reported as fraudulent, this is simply the way global card protocols work - the merchant seeks an authorisation from the customer's bank, and once given this can't be unilaterally reversed by your bank, as they're committed by the rules to settling the transaction if this is subsequently requested by the merchant, as is usually the case.

There should be checks and balances to align the amounts but if you only authorise £32 and the retailer charges £92 then you can open a chargeback claim to get the difference back via your bank if the retailer is uncooperative.

M25

So, you're blaming the bank for you not being more careful where you shop and giving out your personal details?

born_again

1.When you approve a payment via your bank app for a specific sum, why does the bank algorithm not have an alert when a much higher, unauthorised amount is taken by the retailer? Why don't they require you to re-authorise the larger sum? It seems that authorising a small sum effectively opens your account for potential misuse and fraud by the retailer, and/or addition of unlawful upsales charges to your credit card without any notice to you, the account holder.

It is the way the payment systems are set up.

Many retailer will do a ZERO check to confirm the card is live (SECURITY CHECK)

Retailers have the right to keep card details for as long as their local tax dept requires them too.

Authorisations are a guaranteed form of payment. Without this no retailers would take card paymenrts. Or you could simply walk in buy something, walk out & ring bank to cancel payment.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6672875/why-do-some-banks-help-scammers

Authorisation is totally unnecessary in the payment flow, or at least they were last time I did work on card payments. What fees the merchant pays however is inversely proportional to the level of checks they allow the acquiring bank to do. For example we got a 20% discount in our fees when we enabled AVS many years ago.

Obviously each acquiring bank is free to set its own fees but they themselves are the ones that fund chargebacks and its their problem if they cannot recover the monies from the merchant so most are conscious not to end up with large debts when the merchants customers clawback transactions.

CPAs are obviously a very different matter but it's not clear if you are talking about a CPA or one off transaction.

Remember that Visa/Mastercard are global rails, to change it requires thousands of banks to update systems at their own expense, has to be compliant with circa 210 countries legal jurisdictions etc. Changes are therefore often slow and very often "optional" to ensure maximum compatibility across borders etc.

Unfortunately there are probably more unscrupulous customers in the world than merchants and so banks have to balance protecting customers from bad merchants to protecting merchants from bad customers. If you could just phone up and cancel a transaction on a whim why would anyone accept card payments? Every customer could just walk out the shop and cancel the payment. Speak to merchants and may think even the existing rules are far to heavily weighted towards the customer as it is.

Exodi

When you approve a payment via your bank app for a specific sum, why does the bank algorithm not have an alert when a much higher, unauthorised amount is taken by the retailer? Why don't they require you to re-authorise the larger sum?

This feels a lot like scapegoating the bank when the issue looks clearly to be somewhere between you and the retailer. There are countless legitimate reasonable examples where a retailer requests a token amount intially and later takes a larger amount… just off the top of my head - fuel forecourts, car rentals (e.g. where they add fuel charges/incidental fees on return), hotels (e.g. for damage/room service after departure), etc.

Others voice the point around why banks can't just unilaterally cancel authorised payments well.

sheenas

A friend of mine who was stupid. Fell for one of these scams. They first asked them to delete the banking app, then download another application and transfer money via apple pay.

Apple or Barclays would refund the money.

confederated

https://forums.moneysavingexpert.com/discussion/comment/82037721#Comment_82037721

A standard answer in this group - customer error. Most of us are human, flawed and all, but clearly some are perfect. If you find something in the nature of a scam has occurred and you tell the bank about it, there should be a procedure where the transaction could be cancelled. I've been through this where the company concerned was a Chinese scam outfit posing as a British concern, and fortunately my transaction was only £35. As soon as I realised I informed my credit card company, but they said they had to wait several weeks before they could contest the charge. Eventually they did a charge-back, but it took a lot of work on my part and several reminders before they took action. It does look like the banks actually condone scams so I completely agree with the OP.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82038354#Comment_82038354

Re "If you find something in the nature of a scam has occurred and you tell the bank about it, there should be a procedure where the transaction could be cancelled" - as you accept, there is such a process, namely chargeback. This is the recognised mechanism via which transactions can be reversed - people would obviously prefer if they were able to get this done in real time before transactions complete, but it's explained in earlier posts why it isn't possible for banks to take one side's word over the other's without following due process. The fact that your bank wasn't particularly responsive doesn't actually change the principle that this is the way it needs to happen…

Nasqueron

https://forums.moneysavingexpert.com/discussion/comment/82038354#Comment_82038354

It's a standard answer because it is the only (and correct) one.

It's been drummed into people a thousand times over, never download apps from unsolicited calls, never transfer money to others banks if you get a call from "your bank", always check and double check things, hanging up and (on a mobile anyway, wait a couple of minutes or use another line for old school landline), call your bank directly and check oh, and if something sounds too good to be true, it normally is. Banks refunding customers willingly giving away money for scams, whether fake fraud, get rich schemes etc costs the responsible majority in terms of lower interest, lower dividends for shares, less generous offers etc.

If anything, people should own their own mistake and stop demanding banks bail them out because they ignored the multiple warnings from the bank which pop-up in apps/online banking or even in branch in most of these scams