Money Box Live: Fighting Back Against Fraud

This BBC podcast is supported by ads outside the UK. Hello, welcome to this Moneybox Live podcast with me, Felicity Hanna. Every minute, people and businesses in the UK lose £2,207 to fraudsters. Every single minute. That means that by the time I say goodbye at the end of this programme, almost £62,000 will have been stolen by criminals. And whether someone loses a small amount or a life-changing sum, the distress and inconvenience can be huge.

I don't think I can put into words how I felt. I mean, my stomach dropped. It's been handled appallingly. We've been focusing on fraud all week at the BBC, but today we can reveal the scale of the issue. More than half a billion pounds were stolen by fraudsters just in the first six months of the year. That's what newly published numbers from the banking body UK Finance shows. Here's what some people told the BBC about how they were tricked.

Somebody applied for a maintenance loan in my name and I started being chased for the money and actually had money taken out of my pay. I got a call from people posing to be Amazon saying that my Amazon was currently being hacked. And they were already there. All the items were there in my cart and constantly moving around as if they were being sold. Because obviously it was them that had actually hacked me and then was pretending to be the ones that were going to save me.

So at this point, I was very stressed and feel like a complete idiot now. They managed to get me to move all my money. I was actually sending money straight to them. I had been scammed. I just couldn't believe it had happened and I couldn't believe that I'd fallen for it. You can hear how distressed people get about this. Well, listening to that is Ben Donaldson, Managing Director of Economic Crime at UK Finance. Ben, good afternoon.

That number, more than half a billion. It has come down, hasn't it? Come down 6% compared to the year before. It's still unacceptably high. That's absolutely right. So there has been a small reduction, but it is a staggering amount of money. And as your case studies show, this is as much about the human impact as it is the financial loss, because the human impact can be in many ways even more devastating than the financial cost of these crimes.

And the financial cost has been reduced over the years, so 69% of money stolen is now returned by the banks. That's up 50% compared to a couple of years ago. That is good news, but why isn't it higher?

So it is good news and it is an improvement. I think one of the things that we need to consider when we're talking about reimbursement is whilst we obviously want victims of crime to be reimbursed, there are cases where the story is slightly more complicated. Obviously in some situations it's very clear that...

fraud has happened and then it's right for that victim to be reimbursed. But also from our perspective we really want to focus on prevention. There's a risk with reimbursement potentially having an unintended consequence and actually making things. easier for the criminals unless we, in parallel, make sure that we're really focusing on prevention, which we in our industry very heavily invest in. How does it make it easier for the criminals? They don't care if we get our money back or not.

Well, the problem is that it doesn't do anything to deter them. But they don't care. They don't care what happens on the other side of the crime. They want to get cash, steal cash from us, and then they've checked out. They don't care what the consequences are.

And it's the fact that they don't care, which is the key point. You're absolutely right. At the end of the day, the criminals are still profiting from that because it is the bank reimbursing the victim from other funds. And ultimately, that cost will be borne by banking customers. So it doesn't solve the problem in isolation.

Reimbursing customers who've been defrauded is the right thing to do, but prevention is so much more important, which is why we invest so heavily in that. Prevention is important, and that's what we're going to be talking about a lot on today's programme. But by this time next year, the Financial Services and Markets Bill will mean that banks

have to reimburse almost every victim. Yes, that's true. And as I say, though, in parallel, we really need to focus on prevention because our concern is there is a potential unintended consequence if the reimbursement... regulations are not implemented or in a way which is you know working in tandem with a

wider whole system response. I still don't fully understand how there could be an unintended consequence from banks reimbursing. I'll tell you what, let's bring in somebody else who's joining us throughout the programme, Catherine Westmore, Senior Research Manager at the Centre for...

Financial Crime and Security at RUSI, which is a defence think tank. Catherine, good afternoon. Good afternoon. Ben is concerned then that if we are seeing fraud reimbursements happening for all victims, that that might have an unintended consequence and I think there are two sides to this argument I think

The point around unintended consequences is well made. And I think there's also an issue as to whether consumers will have the same level of awareness around frauds if they know that they're going to get their money back in almost all situations. And as I think Ben rightly says, this... customer reimbursement doesn't necessarily go to the heart of disrupting organised criminals who run a lot of these scams. That said, I think...

What we want to see and what I think a lot of people want to see is fairness for consumers. If they lose money through no fault of their own because they've been socially engineered and manipulated, then they should be getting their money back. Ben, we heard on Saturday's programme that one thing that would make a big difference, would potentially disrupt some of these crimes, would be a 24-hour delay to payments. Why won't banks do that?

So we are keen to look at all of the different options here and as part of trying to develop a whole system response we need to make sure that we have the ability to prevent these crimes happening in the first place to slow down payments and for reimbursement to be part of that wider whole system response. So it is something that banks perhaps ought to consider? So we're keen to consider all of the options. The main focus for us is finding the most...

the most effective outcomes that are really going to protect victims and have the greatest impact on criminals and any preventative measures we are very, very keen to pursue. And I think as the statistics show the key thing there is making sure that other sectors where...

this activity is happening on their platforms primarily. That's the key part of preventing these crimes. We'll talk more about that in just a moment. But I just want to put to you, banks have closed 5,600 branches since 2015. That's according to which, that's an average... of 54 a month. Are banks forcing people into online and app-based transactions and potentially putting them more at risk then of online fraud?

One of the interesting things, I think, with the statistics that we've released is that the types of fraud which happen within the banking perimeter have actually reduced because we are able to use sophisticated security systems and more effective anti-fraud messaging. I think we as an industry are doing a huge amount and investing very heavily to make sure that different...

ways of banking are as secure as we can make them. The issue here which the figures show is that it's when things are happening outside the banking perimeter that's where the level of criminality is increasing.

Thank you. Let's take our first call. Neil is on the phone. Neil, good afternoon. Good afternoon. Thank you so much for agreeing to tell us your story. You were scammed two years ago. Tell me what happened. First of all, I was trying to improve my financial standing and Martin Lewis' endorsement ad came up on the website. Oh, he warns about those, doesn't he? Because they're not really endorsed by Martin Lewis. Yeah, at that time I didn't realise.

So I was investigating into cryptocurrency and commodities. I clicked onto his ad and it's redirected to a small window, filled out my information on it. And after two, three hours, these people phoned me up and introduced themselves. And they said, go on to their website. So they ring you up and entice you into making payments that you believe are investments.

It took you time to realise that this was actually a fraud? It took weeks. Weeks after. Yeah, it took about under a month. What a difficult time. I mean, how much did you lose? Nearly £40,000. £40,000. Oh, Neil, I mean, that is a life-changing sum. What did you do? Did you contact your bank? Yes, yes we did. We did contact both our banks actually because my wife was involved in it because it was sort of, most of the payment was mine and the other payment was my wife's and HSBC and Lloyds.

said because it didn't come up to the ongoing threshold of 5,000 and it didn't trigger off alerts. It's very, very difficult. I mean, did you get any of your money back? None, none at all. Even the financial honoursman didn't upheld it, agreed with it. banks saying it was a set rule of their payment that they didn't come up to their amount. So you didn't qualify for that support getting back even after you escalated it to the ombudsman. We always get emails from people.

who think that they would never fall victim to something like this? What do you want them to know? What do you want listeners to know about just how convincing it was? Just really, triple, quadruple check. But to me, I think the banks should have done more for us at that time, like they do now on the phones and such like.

Neil, a really, really difficult story, and I really very much appreciate you telling us it. Thank you so much for joining us. Ben, it's interesting. Neil hasn't been able to get a reimbursement, but he has escalated it, and the Ombudsman's found in favour. of the banks. I suppose sometimes that happens if somebody hasn't taken the steps or the care that the Ombudsman feels they ought to have.

So firstly, I'm really sorry to hear what's happened to Neil and that he's lost that amount of money. That's awful and it highlights the devastating nature of these crimes and the human impact as well as the obviously very significant financial impact in his case. So I'm very sorry to hear that. That's dreadful.

And yes, you're absolutely right. Many of these cases, they will be examined by the bank and then be escalated to the ombudsman. And it's obviously impossible for me to comment on that particular case. In that case, obviously, as Neil described, the Ombudsman is found in the bank's favour, which does happen. But as the figures show, we do reimburse most victims of fraud.

Yes. Now, Catherine, Neil's case is what's known as APP fraud. That's authorised pushed payment fraud. And the number of victims there, if you look at UK finances figures, it's up 22%. Now, this is where the criminal tricks the victim, like in Neil's situation.

to willingly making bank transfers. And there's lots of different tactics, aren't there? It could be that they pretend to be the police or the tax office or a love interest or a crypto investment opportunity, for example. Why is that particular kind of fraud on the rise, do you think? I think what we see is that it's a fairly successful type of fraud. Fundamentally, a lot of the criminals behind these frauds are running what is an effective business. And when they find a...

a type of fraud that works that they can commit at scale easily, where there's very little chance of them getting caught or prosecuted, then they will just keep on doing it again and again and again. And I think what the statistics out from UK Finance show today is that... criminals are focusing on the really high volume but lower value frauds because they are in effect easier to get away. I think Neil's story highlighted the fact that when it's small payments going out...

Bank security systems don't always detect that and flag that as unusual activity. And criminals know that.

They're very good at what they do, aren't they? Now, we focus a lot on how people can stay safe. What does it look like behind the scenes at the banks? Well, Dan Whitworth's been to Sunderland to see how TSB is trying to help victims and stop criminals. Hi there, my name's Marcus. I'm calling from TSB Fraud Operations. This fairly anonymous-looking call centre based above a branch in the city centre is home to some of the 500 TSB staff who deal with 70,000 calls about fraud.

each month. Looking around the place, there are a couple of dozen desks, a big computer screen perched on each one, along with a member of staff, telephone headset in place, deep in conversation with customers customers who may have for the first time just learned they've had anything from a few hundred pounds to their life savings stolen so one of the particular things we do is the fall refund guarantee

We've had that in place in April 2019 and this is where we will refund all innocent victims of fraud. Steph Sinclair, who helps run the place, tells me that means 97% of TSB customers who are victims of fraud have been refunded by the bank, compared to around two-thirds across the rest of the main high street banks.

Obviously the Fraud Refund Guarantee helps people financially. What about emotionally? Because clearly victims of fraud usually feel tremendous feelings of guilt, embarrassment, shame. I think what it does help is when they have been a victim.

It can be quite embarrassing. They don't want to say what the full story is. They might not want to say, oh, actually, I did give out them details, or actually, I did respond to that advert. Because in other cases, they might not get their money back. Yeah, other banks would class them potentially liable in terms of their...

they've given out information. So I suppose when we give them confidence that we really actually want to understand so that we can actually help and protect them going forward, it hopefully gives them that comfort that they can open us to be quite honest. He seems to be very much under pressure to try and get these funds released, doesn't he?

Fraud Prevention Manager Paul Kavanagh talks me through a chart on his computer screen. We're looking at a series of sharp, up-and-down zigzags getting shorter as we follow them across the screen, illustrating how criminals transfer money from a campaign. to account to account, trying to clean their stolen cash. One of the things we're regularly asked, where does this money go? The initial payment is where the fraud occurred.

Then this is the transfer out of the fraudulent payments. So that's all the money that was stolen in the first place, gone to another bank straight away? That's the initial fraudulent payment. Now, as you can see, it bounces between a couple of accounts and then... it gets broken down into numerous little payments and dissipated and then it's very hard to track because one payment has now become 20 different payments.

Is there anything else that can help us at all today? Some of those payments are likely to have been made by the criminals to so-called money mules, individuals, often young adults or teenagers, to pass through their accounts as part of that process. So £3,000 is the original fraud.

that's moved in one lump sum, that's when someone is made a victim. You may notice that some of the payments become slightly smaller, so there may be mule fees or incentives that are given to people to launder these funds and then transfer them out. So the initial payment... I can see is 11.11 and the final payment is 9.20 the following morning. So that's less than 24 hours and this money has gone. Yes.

But it's not just reactive work that goes on here. Staff are proactive too. That's what Ian Selle does in analysing all the data, research and intelligence from a wide variety of sources to try to stop fraud from happening in the world. first place this is all payments that we've stopped these are huge numbers ten thousand nine thousand eight hundred i am gobsmacked at the amounts here

How important here is the data analysis that you do? It is massively important. It's one of the main tools that we have. Detection systems pick up these risk scores that we will come in. and we will stop the payment to try to stop criminals stealing your money trying to stop bad people from stealing good people's money

We can't have a programme about fraud without a bit of Dan Whitworth. Well, joining me now is TSB's Director of Fraud Prevention, Paul Davis. Paul, good afternoon. Good afternoon. That gives us a taste of just how busy a bank's fraud team can be. What are the main trends that you're seeing? In recent years, as banks and TSB amongst them have increased the security of their own systems, one of the major trends we've seen is that most fraud these days happens with some sort of involvement.

And these are sophisticated crimes where a criminal has tricked the customer themselves into making the payment. Yes, absolutely. So what kind of tricks, though, are you seeing them employ? These social engineering tricks, there's no end to the techniques and the imagination that fraudsters will deploy. One of the most common is a purchase scam where customers are looking for something to buy.

online but the item doesn't exist or the criminal has no intention of posting it. Other types include investment scams and we heard one of them from Neil on this program earlier. Also we have fraudsters contacting our customers all the time. pretending to be somebody they're not. Often these days, they're pretending to be a child contacting their parents, asking them to make an urgent payment to help out.

Literally no end to the imagination of what these crooks will do to trick someone into making a payment. Actually, that scam you just referred to with the... texting a parent it's known as the high mum scam isn't it julie's emailed us on that she says you remember this is where we get a text from an unknown number it pretends to be your adult child says they've lost they've broken their phone and they need money urgently julie says as a family we've had a safe

word since the early 80s just in case neither my mum nor my siblings would transfer money to one another unless our safe word is used an easy sensible thing to do julie thank you very much for that and paul we've also had an email from someone who's embarrassed you

they don't want to give their name. They work as a tech security professional and say they fell for a Facebook marketplace scam. They're embarrassed and they're also worried about people who are less tech savvy. These are very cunning schemes and they can ambush you in place. as you don't expect. That's a really powerful example to hear there, the job of this person.

potentially the last person you'd think to fall victim to a scam. However, TSB and myself, we've been making this point for some time that these are sophisticated scams. They can happen to literally anybody. And really, there's a scam out there for all of us. And when we're targeted at the right time in the right way, literally anybody can fall victim, which is why we need to have this cross-sector approach to prevention.

and much greater action from all parties in that chain to reimbursing victims when it does occur. In fact, you want platforms like Facebook specifically to do more, and you've been meeting with them. We've been calling for some time now that... The scale of fraud that occurs on meta-owned platforms is something that needs to be urgently addressed. It's in Ben's data this week that 70% of fraud cases start online. And at TSB, we found...

that for the three main types of scam which impact consumers, 80% of them begin at Meta-owned platforms. So we wrote to Meta earlier in the summer to highlight our concerns, and we outlined in that letter the five steps... we believe they urgently need to take to make their platforms more secure for consumers. We were really pleased to meet them recently. We had a meeting with executives from Meta where we were able to share our insights and our unrivaled insight.

from having a fraud refund guarantee on how we see their platforms being used. And it's good to know the banks and these platforms are talking to each other because you say so much originates there. But Paul, we contacted Meta, which owns Facebook, as you say, and they told us it's an...

industry-wide issue and that its platforms have systems to block scams financial services advertisers now have to be fca authorized and that they run consumer awareness campaigns on how to spot fraudulent behavior it also said people can report fraud with a few clicks. Are banks like yours just sort of throwing the blame elsewhere? Because ultimately it's you that's the final line of defence. I think the numbers speak for themselves that...

Four in five cases of the main scam type start at Meta. By the time a bank is involved in a scam, a lot of things have happened, and the victim has usually been heavily socially engineered by that point. Banks do a lot to... prevent fraud at that stage. The numbers released this week show that over 650 million pounds was prevented.

by banks. But we're coming at this quite late. And what we've been calling for at TSB is that more action needs to be taken upstream by companies such as Meta and other tech and tech and telecommunications companies to stop the fraud happening in the first place and inaction from those companies right now is causing a very high price for UK consumers.

Paul Davis from TSB. Thank you very much indeed for joining us. And by the way, the BBC has got loads of tips on staying safe available online right now. You can go to bbc.co.uk forward slash be scam safe. Also, if you want to understand more about this.

psychology of fraud. On Tomorrow's You and Yours, Sharival is going to hear from two people who repeatedly lied to the banks that were trying to protect them because they were under the spell of criminals. Ben, if someone thinks they have fallen victim to a fraud, what should they do?

So firstly, many victims, as you've described earlier, feel embarrassed and sometimes even ashamed that this has happened. And I know it's easy for me to say this, but they really shouldn't. This can, as Paul said earlier, this can happen to anybody. There is a scam.

For all of us out there, unfortunately, it's such prolific crime and it's sophisticated criminal methodology. So people really shouldn't feel embarrassed or ashamed. They should contact their bank straight away and they should also report it to the police. But let their bank know that should be the first step. Thank you. Now back in July, listener Roy got in touch after his church was targeted by scammers and cleaned out.

to the tune of £50,000. When we last spoke, Roy was battling with the bank to try and get that money back and it sounded like it was an uphill struggle. But he's on the line now and can give us an update. Roy, good afternoon. Good afternoon, Felicity. What's the news?

Well, we went through the various features of the bank and they eventually turned it into a complaint and said I'm sorry we can give you 50% back which they did but we can't take it any further and if you wish to go to the ombudsman which we did. And I'm delighted to say that the Ombudsman found in our favour because the bank had already said that, you know, there was an opportunity to suspend the payment and prevent it leaving your account. We're sorry we didn't take that.

There was a lot of evidence that we had done everything we could to check it, and so we were delighted the ombudsman found in our favour just this week, in fact. I got the email back from them. But it was at least over a year before we got that final version. That must have been such a relief. Just remind us how the original fraud played out. Well, it was similar to something you've just heard about.

call to the church came to the minister who was given an 0800 number to ring with a reference so the treasurer then received that and felt confident that it was genuine that it was the bank and then contacted them only to be told that there was suspicious payments and some impersonation going on in her name. A lot of psychological pressure was placed upon her. So they advised that they could set up a safe account.

transfer our church funds into which of course she did and naturally it all went through very quickly and when she heard nothing she contacted the real fraud office of the bank and the other telephone number and only discover is it all left and you can imagine how she must have felt now you've gone through this process of escalating it taking it to the financial ombudsman what's your advice for anyone in this position uh well

Firstly, the first thing, because we have an online account and it used to be a cheque account in which two signatures were required, but we were advised and have taken over double authorization of all our funds so that both myself and the treasurer now have to approve each. payment and I suppose we have learned the lesson as a charity and particularly as a church.

uh to to follow the advice of our founder jesus that we should be as wise as serpents and more suspicious of those who call because perhaps we're a bit too trusting and we need to ask ourselves some hard questions sometimes so i think of caution but

What we did feel is that it would have been great if the bank had just intervened and there was an alarm flash to simply say, this is the entire funds of the account that's about to leave it. Let's stop it for 24 hours. And that would have really helped us because then she could have made... that goal earlier and realised it was false.

Roy, thank you so much for coming back, updating us, telling us your story. And I'm so pleased it's a happy ending for you and your church. Catherine, this is a really important point, isn't it? If you're not happy with how a bank has responded to your fraud case, you can escalate it.

Absolutely. So if you're not happy with the bank's initial response, you can complain directly to the bank and they should get back to you about your complaint and investigate it within 15 days. If they don't or you're still not happy, then you can take it. as Roy did, to the Financial Ombudsman Service, who will investigate the circumstances of the fraud and decide whether to uphold your complaint or not. And when it comes to these APP-type frauds...

The financial ombudsman generally uphold just over 50% of fraud. So if you have been defrauded and you're not getting any success from your bank, definitely worth escalating it. Absolutely. Thank you very much. I think we've got time. I'm going to squeeze in one last tip from you, Ben. What's your single most important tip for protecting yourselves in a word? So I would say to stop and think because only criminals will try and rush you.

It's very, very good advice. Thank you. And speaking of being rushed, that is all we have time for today in this Moneybox Live podcast. I want to really thank everyone who's been in touch because it's... It's just not easy talking about fraud, and doing so helps everybody stay safe. Thanks as well to today's experts. We've been hearing from Ben Donaldson from UK Finance, Catherine Westmore from Rossi's Centre for Financial Crime and Security, and also Paul Davis.

And I think I just have time to play a clip from yesterday's Call You In Yours programme with Winifred Robinson. I ended up giving her absolutely everything. all my details, pins, parts, numbers, you name it, I gave them to her. And then all of a sudden, for some reason in my head, I heard Paul Lewis's voice from Moneybox.

Banks will not ask you for personal bank details. And that was it. The spell was broken. Well, that's good. He was on your shoulder like a guardian angel. Bless him. Absolutely. Yes. What happened? So there you go. Picturing Paul on your shoulder is one way to stay safe. Another way, of course, is to listen to Moneybox at midday on Saturdays when he brings you the latest money news. This week he's talking about loan sharks. If there's an issue you want Paul, me or me,

or the team to take a look at, then you can email us. It's moneybox at bbc.co.uk. In this podcast, the producer was Sam Clack, reporter Dan Whitworth, production coordinator Luke Smithhurst. The studio manager was Chloe Wilson. Our editor is... Hi, I'm Christy Young, and this is Young Again, my podcast for BBC Radio 4.

where I get the chance to meet some of the world's most noteworthy and intriguing people and ask them the question, if you knew then what you know now, what would you tell yourself? I don't regret anything in my life. You don't? No way. Oh, if we could only turn back. For me, well, I'd probably tell my younger self to slow down, not to be so judgmental, that all that worrying was wasted energy and that a perm...

is always a bad idea. This might be the best therapy I've had all year, by the way. So you never know. Join me for some frank and I hope fascinating exchanges. Subscribe to Young Again on BBC Sounds. A Vivint home is a smarter home. Vivint lets you keep an eye on your kids from anywhere, so it's a smarter way to care. Because Vivint adjusts your thermostat when it knows you're out, it's a smarter way to save.

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