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JEFF PRESTRIDGE: The fraudsters raiding our bank accounts are wrecking so many lives

The pandemic has wreaked havoc across the country, touching all of our lives, and we still don’t know the full extent of the human and economic cost.

But, bizarrely, there is one group that has thrived in the past 15 months, a group we all detest with a vengeance: financial fraudsters.

The pandemic has enabled these despicable criminals to breed like never before.

They have become a plague of financial fraud rats, using the cloak of lockdown, home-working and our increasing use of the internet to empty our bank accounts.

According to data compiled by the National Fraud Intelligence Bureau, nearly half a million people have lost a total of £2.6 billion over the past 13 months as a result of fraud or cyber crime.

Sadly, nobody in authority – be it the Government, regulators, the police, the banks, internet search engines and phone companies – seems prepared to rid the country of this vermin.

The pandemic has wreaked havoc across the country, touching all of our lives, and we still don’t know the full extent of the human and economic cost. But, bizarrely, there is one group that has thrived in the past 15 months, a group we all detest with a vengeance: financial fraudsters. (File image)

As a result, more than a thousand people are being scammed every day. Victims are old and young and come from all walks of life – doctors, dentists, lawyers, shop workers and teachers. No one is spared and, in many cases, people’s lives are ruined.

It’s an untenable state of affairs which needs addressing urgently. We, as a country, need to fight fire with fire, hunt down these criminals and lock them up. Whatever it takes, I say.

Seldom does a day go by now without a number of readers contacting me and my personal finance team about a scam they have just fallen victim to.

It could result from an official-looking text sent to their phone alerting them to a tax refund they are apparently eligible for. As soon as they click on the accompanying link and provide their bank details, the fraudsters gain access to the account and plunder it.

Alternatively, the scam might have started with a phone call purportedly from a customer’s bank alerting them to a suspect payment taken from their account. 

Or, increasingly, it might be a result of a hoax financial promotion on the internet, offering attractive interest-paying bonds from an established financial company, or fraudsters using the popularity of cryptocurrencies to get people to set up trading accounts with money they will never see again.

Many victims are left to pick up the pieces alone. According to consumer organisation Which?, individuals are losing £700,000 every day to fraudsters as a result of being coaxed into transferring money from their bank accounts.

Such ‘push payment’ fraud is endemic, and although a voluntary code drawn up by the major banks is meant to ensure all innocent victims get refunded, nothing could be further from the truth.

The code is interpreted differently by individual banks, with some playing hard-ball, blaming customers for not doing enough to prevent the fraud committed against them. Two banks currently reject more than nine of every ten claims while, overall, more requests for refunds are rejected than accepted. The fact the banks do not have to reveal their own reimbursement-rejection rates allows those which treat scam victims shamefully to get away with it.

Which? has long called for the regulator – the Payments Systems Regulator – to intervene so that customers can decide if they want to have their account with a bank which will be not be there for them in their hour of need. So far, its call has been ignored.

The banks could, and should, be doing more to protect customers from financial fraud and the consequences of it (more on this later) but they cannot be held solely responsible for where we have got to. The weakest link by far is Action Fraud, the organisation that victims are encouraged to turn to to report details of any financial fraud committed against them.

Run by the City of London Police in conjunction with the National Fraud Intelligence Bureau, Action Fraud is the reporting hub for victims of fraud and cyber crime in England, Wales and Northern Ireland (Scotland does things differently). 

More than a thousand people are being scammed every day. Victims are old and young and come from all walks of life – doctors, dentists, lawyers, shop workers and teachers. No one is spared and, in many cases, people's lives are ruined. (File image)

More than a thousand people are being scammed every day. Victims are old and young and come from all walks of life – doctors, dentists, lawyers, shop workers and teachers. No one is spared and, in many cases, people’s lives are ruined. (File image)

Fraud victims get a police reference number from Action Fraud, an acknowledgement of the information they have provided, and then wait in the expectation that someone within the police force will investigate their case and hopefully bring the criminals to justice.

But it doesn’t work like that. The name Action Fraud is a misnomer. As my colleague Rachel Rickard Straus reports on pages 126-7, only four per cent of fraud cases reported to [In]Action Fraud are then passed on to law enforcement agencies to look into. A scandalous state of affairs.

Even when Action Fraud is presented with details of those involved in a fraud – as in the case of the one committed against Catriona Oliphant in Rachel’s report today – it doesn’t seem to want to know.

No wonder Action Fraud is variously described as ‘flaccid’ (Money Saving Expert Martin Lewis), a glorified call centre (a leading academic), ‘not fit for purpose’ (former Minister Baroness Altmann) and ‘woefully under-resourced’ (Martyn James, of consumer complaints handler Resolver).

Tony Hetherington, this newspaper’s consumer champion, pursues fraudsters for a living. He describes Action Fraud’s work as no more than an ‘intelligence-gathering operation’. Only in a minority of cases, he says, is any ‘intelligence’ gathered used as part of a proper investigation of the sort that victims expect.

Along with academics who specialise in analysing fraud and economic crime, Hetherington describes the subsequent investigation of cases as haphazard, a postcode lottery. ‘Some police forces still have experienced fraud investigators among their ranks,’ he says. ‘Others do not even possess the capability to deal with straightforward cases.’

So, what needs to be done to help conquer this plague of financial fraud rats? Certainly, there is an overwhelming case for the ineffective Action Fraud to be overhauled or, even better, replaced with a dedicated, properly resourced police unit focused purely on fighting financial crime. One that could be funded in part by the profit-rich big banks, internet providers and mobile phone providers.

After all, it’s in all their best financial and reputational interests for fraudsters to be hunted down and locked up for their crimes. The idea of such a unit has its supporters, including Baroness Altmann.

Yet the lead really needs to come from the Government. For the past decade, successive administrations have been keen to see overall crime figures driven down. 

As part of this process, police forces were encouraged to push fraud investigations to one side in favour of solving less complex and time-consuming offences. It has resulted in a crazy situation where 30 per cent of all crime is now economic crime but only one per cent of the police budget is used to fight it.

This clearly is untenable. What now needs to happen is for Boris Johnson’s Government to be bold. It should accept what we all know already – that financial fraud is out of hand – and then act to stamp it out. That means giving the police the resources to go after the financial scammers and prosecute them. Whether that’s through the generosity of the public purse or by requiring the banks et al to contribute, it makes no odds.

As things stand, committing a financial scam against a member of the public is almost a no-risk crime. That is unacceptable. It is time to do damage to the financial fraud rats. 


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