Urgent warning over ‘scam’ banks WON’T refund as victim loses £190k – don’t get caught out
BRITS have been warned over a “scam” which banks won’t refund – after a victim lost £190,000.
Ruth Fretwell, 63, from Brighton, invested the inheritance from her mum in a property development scheme.
When the scheme failed, Ruth hoped she would be refunded by Barclays.
But the bank said it would not refund her – because the scam was a Ponzi scheme.
A Ponzi is a fake business where new investors’ money is used to pay profits to older ones.
Ruth was one of around 140 people who ploughed £30million into the scheme from 2019 to 2022.
Investors in the “residential property projects” were promised 10 per cent returns for three years.
They were even sent fake brochures describing the company’s “secure returns” and 20 years of experience.
But on New Year’s Day in 2021 Ruth got an email saying the firm was “closing the gate” on any pay-outs to investors.
She told The Sunday Times: “It came completely out of the blue. Just weeks earlier I was invited to make further investments.
“I received a cheerful Christmas greetings email with no indication of any problems.”
Weeks later, the firm went into administration – and was soon exposed as a potential scam.
Ruth hoped to be refunded by Barclays for the lost £190,000 under a voluntary scheme where banks protect customers from scams.
But the bank told Ruth: “The claim has been deemed a Ponzi and not a scam. We won’t be able to investigate it as a scam.”
In a statement, Barclays said: “Before making investments, we encourage everyone to take steps to satisfy themselves that the person or business they are paying is legitimate.
“If in any doubt we urge they get independent financial advice before transferring any monies.
“In this specific matter, the Financial Ombudsman Service is investigating.
“It would be inappropriate to comment further until the conclusion of its review.”
Ruth has complained to the ombudsman while administrators probe the collapsed scheme.
Cops also launched a fraud investigation after more than 120 investors complained.
But detectives have reportedly dropped the probe because of a lack of resources and the “notorious” difficulty of fraud prosecutions.
Kent Police has been contacted for comment.
How to keep your money safe from Ponzi schemes
Brits lost more than £460million last year to schemes like the one which caught out Ruth.
Crooks often pose as legitimate firms with records on Companies House – making it hard for cops and banks to unravel their frauds.
Some banks have argued that Ponzi schemes are not always scams – meaning victims are not entitled to a refund.
But the ombudsman has often ruled against banks – ordering them to compensate Ponzi victims.
The banking regulator said that some Ponzi schemes are covered by fraud refund rules – subject to a complex set of criteria.
Always seek independent financial advice to check whether a firm is legitimate before making any investment.
If you think you have fallen victim to a scam or Ponzi fraud, lodge a claim with the ombudsman.
You can also call your local police force on 101 if you suspect criminal fraudulence.
But once you have handed money over to fraudsters, there is no guarantee of getting it back.