Worst banks for refunding fraud victims revealed – as loser returned just 9% of losses

THE banks least likely to refund fraud victims’ lost funds have been revealed and the worst returned just 9% of customers’ missing money.

Overall reimbursement increased from 61% in 2022 to 67% in 2023, but there are huge differences in the amount paid back by the top performers and the worst banks.  

The best bank for reimbursing funds was TSB, which refunded 88% of lost cash in 2023, according to analysis by consumer experts Which? and figures released by The Payment Systems Regulator (PSR).

The worst bank was Allied Irish Banks (AIB), which paid back just 9% of funds to fraud victims.

For the second year in a row, the three lowest spots on the league table were taken by AIB, Danske Bank (which reimbursed 13%) and Monzo (which paid back 17%).

The top three spots also remained unchanged this year, with TSB, Nationwide (87%) and HSBC/First Direct (76%) leading the way in terms of reimbursing customers.

AIB may have refunded the lowest percentage of fraud victims overall, but it did also have the lowest losses to fraud per £1million of transactions.

For every £1million of transactions made through AIB, just £38 was lost to fraud.

TSB and Metro Bank, on the other hand, lost the highest amounts lost to fraud, at £266 per £1million of transactions.

The data relates to authorised push payment (APP) frauds, also known as bank transfer scams.

These scams often see criminals impersonating banks, the police, investment companies or solicitors to persuade victims to transfer money to them.

Scammers sometimes also sell non-existent items and ask victims to pay money by bank transfer into an account.

Brits who fell victim to APP fraud lost a combined £459.7million in 2023, down slightly from £485million in 2022, according to UK Finance.

What did the banks say?

Responding to the figures, AIB NI said: “We’re committed to protecting customers from fraud, making them aware of the latest scams, educating on the best ways to keep their money and details safe, as well as supporting them if they do fall victim to fraud.

“The PSR’s report shows that AIB has the lowest level of APP fraud per million of transactions, with our customers impacted the least. This is in part due to the level of protection and support we have in place.”

A spokesperson for Danske Bank said: “We take fraud very seriously and we’re continually investing in measures to further protect customers and indeed wider society from the impacts of fraud.”

A Monzo spokesperson said: “We’ve stopped 55% more fraud since this time last year because of our commitment to building and leveraging best-in-class technology while hiring top experts to keep our customers’ money safe.”

Calls for stronger protection for customers

Many banks are already signed up to a voluntary reimbursement code, but there have been concerns that this is not being applied consistently.

Which? has led calls to implement stricter requirements on banks to reimburse fraud victims.

As a result from October 7 mandatory reimbursement rules are to be introduced.

Under the mandatory reimbursement rules, most victims of APP fraud will be reimbursed within five business days and there will also be additional protections for vulnerable customers.

High street banks and building societies as well as smaller payment firms will all need to sign up to the new rules, which were originally expected to come into force from April 2, 2024.

Rocio Concha, Which? director of policy and advocacy, said: “The PSR’s report acknowledges levels of performance vary hugely depending on which bank a consumer uses, so while there have been some improvements, fraud victims are still facing a reimbursement lottery and some firms are clearly way off the pace. 

“The government and the regulator have faced heavy lobbying by sections of the industry to push back against the new mandatory reimbursement scheme, which will see the vast majority of scam victims get their money back. Today’s figures clearly show these new rules cannot come soon enough and must not be delayed.

“Consumers are being targeted by highly sophisticated scams, which they can often do little to protect themselves from. The UK is in desperate need of these protections that have been years in the making and will play a vital role in the fight against fraud.”

How to avoid scams

Scams are getting increasingly sophisticated, but there are a number of red flags to keep an eye out for if you’re being asked to transfer money.

If you receive a text or email asking for personal details, you can check if it’s real by calling whoever it claims to be from.

Your bank, for instance, will instantly confirm if it’s fraud and will advise you on what to do.

Any bank, trusted organisation or public bodies like councils or the police would will never ask you to withdraw, transfer or send back money from your account.

If you think you have been a victim of a scam, you should report it as soon as possible.

There is no guarantee you’ll get your money back, but banks will often compensate you if you can show you did not know the money would leave your account.

You can forward scam emails to report@phishing.gov.uk and should also contact your bank and report it to Action Fraud, which will give you a crime reference number.

Check if your bank is signed up to the voluntary APP code, which indicates it has pledged to reimburse customers who have been tricked into sending money to scammers.

If your bank is signed up and refuses to refund you, you can complain and ask it why it is not abiding by the code.

You may be able to report the case to the Financial Ombudsman Service, which reviews disputes between customers and financial firms. If it agrees with you your bank may have to pay you back.

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