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| Banks must do more to end the scourge of current account fraud | Banks must do more to end the scourge of current account fraud |
| (7 months later) | |
| When Sarah Neville got an email from her carpenter saying he had just had a cancellation and could start the job they had been discussing within three weeks, it didn’t arouse the slightest suspicion. | When Sarah Neville got an email from her carpenter saying he had just had a cancellation and could start the job they had been discussing within three weeks, it didn’t arouse the slightest suspicion. |
| The Bristol woman, who had spent several weeks emailing him, working out the minutiae of the planned renovations, was so happy it was finally going to happen that she quickly paid the £1,500 deposit into his Barclays bank account before he changed his mind. Even when he failed to turn up she still assumed there was an innocent explanation. Only when she finally got hold of him did the truth emerge. | The Bristol woman, who had spent several weeks emailing him, working out the minutiae of the planned renovations, was so happy it was finally going to happen that she quickly paid the £1,500 deposit into his Barclays bank account before he changed his mind. Even when he failed to turn up she still assumed there was an innocent explanation. Only when she finally got hold of him did the truth emerge. |
| The carpenter said he knew nothing about the cancellation, and hadn’t sent the email giving Neville the go ahead and asking for the £1,500 deposit. It then emerged that his email had been hacked and the bank account into which she had paid the money wasn’t his. | The carpenter said he knew nothing about the cancellation, and hadn’t sent the email giving Neville the go ahead and asking for the £1,500 deposit. It then emerged that his email had been hacked and the bank account into which she had paid the money wasn’t his. |
| It’s a scam 99% of us would have probably fallen for. Three months on, Neville has been left wondering what she could have done differently. She is also coming to terms with the fact that she won’t see her £1,500 again. | It’s a scam 99% of us would have probably fallen for. Three months on, Neville has been left wondering what she could have done differently. She is also coming to terms with the fact that she won’t see her £1,500 again. |
| Barclays, which operated the account that the fraudster used to accept her money, has told Neville it is not responsible as it acted entirely within the regulatory rules that govern account openings and payments – though it has since shut down the account involved. | Barclays, which operated the account that the fraudster used to accept her money, has told Neville it is not responsible as it acted entirely within the regulatory rules that govern account openings and payments – though it has since shut down the account involved. |
| Her case highlights a major vulnerability in UK bank transfers: you can put any name on the transfer request (even Mickey Mouse) and the payment will still go through. It also shows the need for consumers to be very wary of any request for a bank transfer sent by email involving an account you’ve never paid before – however plausible it appears. | Her case highlights a major vulnerability in UK bank transfers: you can put any name on the transfer request (even Mickey Mouse) and the payment will still go through. It also shows the need for consumers to be very wary of any request for a bank transfer sent by email involving an account you’ve never paid before – however plausible it appears. |
| Guardian Money has long argued that UK online bank transfers need some simple but important reforms – measures that would stop most bank transfer fraud in its tracks – but so far the financial authorities appear to have turned a deaf ear to the problem. Action Fraud, the body that collates crimes such as that suffered by Neville, has become known in some consumer circles as “all fraud and no action”. Critics say it only passes on cases to the police where it believes the crime was perpetrated by a “network” of criminals that has stolen large sums from a lot of people. Most victims who report thefts never hear from the police or Action Fraud again. | Guardian Money has long argued that UK online bank transfers need some simple but important reforms – measures that would stop most bank transfer fraud in its tracks – but so far the financial authorities appear to have turned a deaf ear to the problem. Action Fraud, the body that collates crimes such as that suffered by Neville, has become known in some consumer circles as “all fraud and no action”. Critics say it only passes on cases to the police where it believes the crime was perpetrated by a “network” of criminals that has stolen large sums from a lot of people. Most victims who report thefts never hear from the police or Action Fraud again. |
| Could this be about to change? On Wednesday home secretary Theresa May announced a taskforce to crack down on this kind of fraud, noting that it “shames our financial system”. She said the scale and volume of financial activity in the UK “brings… real opportunities for criminals to defraud hardworking taxpayers of their savings and earnings”. The taskforce will be made up of key representatives from government, law enforcement and the banking sector. | Could this be about to change? On Wednesday home secretary Theresa May announced a taskforce to crack down on this kind of fraud, noting that it “shames our financial system”. She said the scale and volume of financial activity in the UK “brings… real opportunities for criminals to defraud hardworking taxpayers of their savings and earnings”. The taskforce will be made up of key representatives from government, law enforcement and the banking sector. |
| Earlier in the week credit reference agency Experian appeared to confirm the problem is getting worse as it reported a “renewed surge in current account fraud”, and that bank accounts are now the most targeted financial product. | Earlier in the week credit reference agency Experian appeared to confirm the problem is getting worse as it reported a “renewed surge in current account fraud”, and that bank accounts are now the most targeted financial product. |
| One of the problems is that there are thousands of current accounts waiting to accept fraudulent payments. Lax security checks in the past, plus the introduction of faster payments, have enabled fraudsters to move stolen money within seconds of receiving it. It could also be argued that the 2013 launch of the Current Account Switch Service has benefited criminals as well as the law-abiding majority, as it makes hopping from bank to bank much easier. | One of the problems is that there are thousands of current accounts waiting to accept fraudulent payments. Lax security checks in the past, plus the introduction of faster payments, have enabled fraudsters to move stolen money within seconds of receiving it. It could also be argued that the 2013 launch of the Current Account Switch Service has benefited criminals as well as the law-abiding majority, as it makes hopping from bank to bank much easier. |
| So what happened in Neville’s case? After discussing the planned work with the carpenter via email, she received a further mail purporting to be from him and confirming the date he would start work, and requesting the £1,500 deposit be transferred to his Barclays account. This last note was in fact a scam. “Since then I have been attempting to get Barclays to repay the deposit,” she says. “In my opinion they had failed to carry out the necessary identity checks before opening the account, which it transpired was set up for fraudulent purposes.” | So what happened in Neville’s case? After discussing the planned work with the carpenter via email, she received a further mail purporting to be from him and confirming the date he would start work, and requesting the £1,500 deposit be transferred to his Barclays account. This last note was in fact a scam. “Since then I have been attempting to get Barclays to repay the deposit,” she says. “In my opinion they had failed to carry out the necessary identity checks before opening the account, which it transpired was set up for fraudulent purposes.” |
| According to Barclays, the most likely explanation is that either the carpenter or Neville unwittingly downloaded malware on to their computer. This malicious software can lie dormant, with the email account holder not knowing anything about it as they can continue to send and receive messages as normal. Only when the fraudster feels the time is right will they ask for money to be paid into an account, hoping that the recipient will trust the source. | According to Barclays, the most likely explanation is that either the carpenter or Neville unwittingly downloaded malware on to their computer. This malicious software can lie dormant, with the email account holder not knowing anything about it as they can continue to send and receive messages as normal. Only when the fraudster feels the time is right will they ask for money to be paid into an account, hoping that the recipient will trust the source. |
| A Barclays spokesman told Money: “Appropriate documentation was presented when this account was opened, and we had no way of knowing it would be used for fraudulent purposes. Prior to the contact received from Ms Neville, the bank had been alerted to the inappropriate activity on the account and acted swiftly to close it. Regrettably we were unable to return any funds.” | A Barclays spokesman told Money: “Appropriate documentation was presented when this account was opened, and we had no way of knowing it would be used for fraudulent purposes. Prior to the contact received from Ms Neville, the bank had been alerted to the inappropriate activity on the account and acted swiftly to close it. Regrettably we were unable to return any funds.” |
| In my opinion they had failed to carry out the necessary identity checks before opening the account | In my opinion they had failed to carry out the necessary identity checks before opening the account |
| In November Richard Emery, who runs security consultancy 4Keys International, called on banks to bring in a 24-hour cooling-off period to stop users sending large sums – say more than £250 – to a newly set-up payee for a day. He also wants account-holder names to match payments. “A solution would be that when you set up a new payee your bank automatically contacts the payee’s bank, which would then send back the account name. This would reduce fraud and eliminate the problems that occur when the payer enters the wrong payee account details,” he said. | In November Richard Emery, who runs security consultancy 4Keys International, called on banks to bring in a 24-hour cooling-off period to stop users sending large sums – say more than £250 – to a newly set-up payee for a day. He also wants account-holder names to match payments. “A solution would be that when you set up a new payee your bank automatically contacts the payee’s bank, which would then send back the account name. This would reduce fraud and eliminate the problems that occur when the payer enters the wrong payee account details,” he said. |
| Back in Bristol, Neville says the bank has refused to accept any responsibility, “even though it told me it has closed the account as a result of how it was being used” – and despite campaigners claiming it has “form” in this area. In 2014 the LegalBeagles network, which helps fraud victims, told the Department for Business, Innovation and Skills that while “each and every UK bank is affected”, Barclays is “predominantly the bank of choice for fraudulent accounts”. On a list of 97 accounts used by fraudsters it reported to BIS, 80 were Barclays ones. | Back in Bristol, Neville says the bank has refused to accept any responsibility, “even though it told me it has closed the account as a result of how it was being used” – and despite campaigners claiming it has “form” in this area. In 2014 the LegalBeagles network, which helps fraud victims, told the Department for Business, Innovation and Skills that while “each and every UK bank is affected”, Barclays is “predominantly the bank of choice for fraudulent accounts”. On a list of 97 accounts used by fraudsters it reported to BIS, 80 were Barclays ones. |
| In 2014 Money told how more than 90% of people who fell for the Owners Direct holiday let scam had paid the money into a Barclays account. In this case also the bank continues to deny liability to victims. | In 2014 Money told how more than 90% of people who fell for the Owners Direct holiday let scam had paid the money into a Barclays account. In this case also the bank continues to deny liability to victims. |
| * Sarah Neville is a pseudonym | * Sarah Neville is a pseudonym |
| How to avoid being scammed | How to avoid being scammed |
| • If you receive an email from a friend or tradesperson asking you to make a new bank transfer, you should automatically be suspicious – however plausible it may seem, writes Rupert Jones. Phone the person to check they have asked for the money and that these are the correct bank details. If it’s a large sum, you may want to send a small amount first, then check they have received it before paying the balance. | • If you receive an email from a friend or tradesperson asking you to make a new bank transfer, you should automatically be suspicious – however plausible it may seem, writes Rupert Jones. Phone the person to check they have asked for the money and that these are the correct bank details. If it’s a large sum, you may want to send a small amount first, then check they have received it before paying the balance. |
| • Regularly go through all bank and card statements to check for suspicious transactions. | • Regularly go through all bank and card statements to check for suspicious transactions. |
| • Check your credit report – it lists your accounts and what you owe, so you can spot applications and spending that are nothing to do with you. | • Check your credit report – it lists your accounts and what you owe, so you can spot applications and spending that are nothing to do with you. |
| • Don’t give too much away on websites such as Facebook and Twitter. If you can’t resist the urge to share the details of your life, don’t use things such as names of your pets/partner/children as passwords. | • Don’t give too much away on websites such as Facebook and Twitter. If you can’t resist the urge to share the details of your life, don’t use things such as names of your pets/partner/children as passwords. |
| • Ignore unsolicited phone calls, texts, emails and letters, particularly if they ask for account details, pins, passwords or personal information. | • Ignore unsolicited phone calls, texts, emails and letters, particularly if they ask for account details, pins, passwords or personal information. |
| • Don’t store account names and passwords on your smartphone, either in emails or in note form. | • Don’t store account names and passwords on your smartphone, either in emails or in note form. |
| • Register to vote at your current address. If you don’t, fraudsters could use your previous address details to open new credit accounts and run up debts in your name. | • Register to vote at your current address. If you don’t, fraudsters could use your previous address details to open new credit accounts and run up debts in your name. |
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