BACKGROUND

Victims of bank scams could be eligible for refunds.

Thousands of fraud victims that have been deceived in to handing over their life savings could now get their money back following a landmark ruling by the Financial Ombudsman.

OMBUDSMAN RULING

The Financial Ombudsman has ordered Santander to refund a customer who lost £12,000, which has set a precedent and will open up the floodgates for claims from many other fraud victims.

The victim in the Santander case thought he was speaking to the Bank’s fraud department and unwittingly gave the criminals the information they needed to transfer money from his account.

Banks typically refuse to refund scam victims in these scenarios on the basis that they authorised the payments or were negligent with their bank details.

However, the Ombudsman ruled that the customer was ‘a victim of a sophisticated scam with social engineering at the very heart of it’ and had not authorised the transactions or acted with gross negligence.

The Ombudsman has now set the bar at a much higher level and if a Bank refuses to refund victims, it will have to prove that they have been truly negligent. The Ombudsman generally sides with the underdog, a precedent has been set and the chances of a Bank winning a similar dispute are slim.

RETROSPECTIVE CLAIMS

This decision means that fraud victims who have recently been refused a refund by their Bank on the grounds that they were grossly negligent could resubmit a complaint to their Bank. The Bank could reopen the case and revisit the decision made and if they refused to do so, the customer could escalate it to the Ombudsman. Customers could also ask the Ombudsman to reopen their case if they have not yet received a final decision.

Customers have a 6 year window to submit complaints to their Bank for disputed unauthorised transactions and 6 months to refer a rejected complaint to the Ombudsman.

The Financial Ombudsman Service receives more than 8,000 cases annually involving fraud and scams and believes that it is not fair to automatically rule a customer as being grossly negligent.

PROFITS BEFORE CUSTOMERS

It is cynical for Banks to try and take this stance towards victims of bank scams and refuse to pay out compensation that is justifiable in the eyes of the Ombudsman. The relentless pursuit of closing bank branches has forced more customers to manage their affairs online, with a corresponding rise in fraud in tandem with more sophisticated scam and fraud techniques.

Making Banks financially liable isn’t enough and they need to tighten up protections and make a more concerted effort to recover these losses. Tougher penalties are also required to reflect the true impact on victim’s lives.

I have personally been a victim of Amazon fraud and PayPal fraud and I have spent a lifetime working in financial services, so it can happen to anyone.

Have you been a victim of bank scams and frauds? If so, what was the outcome?

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