According to the article NatWest said there was no money left. In most such cases the money will be transferred out in minutes, not days and by the time they called Monzo it was likely too late. Recovery is somewherebetween rare and unheard of.
I don’t agree with calling scam victims stupid, but there is a genuine question about whether you should expect a bank to protect you from this sort of thing - it’s your choice where you send your money, not your bank’s and if you want to send someone £3000 from your account it’s your banks responsibility to send it to them.
I do think banks share some responsibility here, and should take some measures. In large part because there are things they can do to stop a lot of these scams in their tracks and just don’t. That, in my view, makes them every bit as negligent.
I also think a greater weighting should be applied on the receiving bank rather than the 50/50 split imposed by the regulator. They should be making it real hard for someone to use a bank account to scam someone like that, and it seems like they don’t. If someone is able to open a NatWest account, scam someone, and essentially get away with it, then NatWest are failing there somewhere. Moreso than Monzo are for allowing the transfer to go through no questions asked.
None of this is to completely remove any sense of responsibility from the victim here, as I know many folks (@Carlo1460) think that’s what my view does. Just to say that they’re not solely responsible. The banks helped facilitate it, they share in the responsibly, and that’s how the code views it too, and the ombudsman should it go to them. That’s why victims don’t usually get all the money back under the APP scheme.
Stupid is a strong and maybe misused word, I do agree, but I honestly struggle to find another word that gets my point across so well, it’s just mind boggling to me
I feel like the only kind of person who would transfer £3k so negligibly, would either be described by it or wouldn’t be bothered by the loss of the money, but it seems like they are always the people who “need the money for food” that they were trying to spend on a purchase just hours ago
I also agree with @N26throwaway, banks must share some responsibility, but I would find it frustrating if that led to delays and extra checks for a purchase of £3k - which for some is a daily, trivial occurrence - and for others leads you to being stuck at a car dealership because the banking system has been made to save the most negligent person possible
Can anybody explain to me a scenario where you could be more negligent than the buyer here? This is like paying cash for something you haven’t seen yet in a sold-as-seen sale…
I personally feel like this example, and the new refund system, is positive reinforcement that will give people infinite confidence that the bank can refund their money - until they lose an amount too big for the banks to actually swallow… sometimes you have to learn a lesson, which is what everyone I know (immediate family included) who was scammed has said, and word for word “how was I that stupid”
I get your point, and don’t disagree entirely but this is also hard to prevent.
Mostly the accounts will be held by money mules - often vulnerable people recruited on Facebook who are enticed to take money and send it on abroad for a fee and who don’t understand they are being asked to launder money. These often also get prosecuted but it doesn’t help recover the money (and they are often really victims themselves).
There probably is more that banks can do, but it would mostly come at the expense of people being able to easily open new accounts and transfer their own money around. I wouldn’t think that more than 0.01% of payments are to do with scams, and they need to keep the other 99.99% working smoothly.
Still, another big argument for making the banks pay is that banks can afford it and consumers often can’t.
Ultimately the bank is providing you a service of letting you hold your money there and send it wherever you want, as defined in their terms with you
Sure the banks could afford to refund them, they could afford to give out free money aswell but they don’t do that
I understand when someone gets hacked, etc but when you authorise the payment it seems insane to me that the idea of you not solely being responsible for that is even entertained
In fact the bank is already going above and beyond by spending their time to try and recall your payment from the receiving bank
What happens when people do this with cash? I don’t doubt the person in the news story would’ve fallen for the same thing with cash, who has to refund them now?
Sure. I think there’s plenty of things banks can do that won’t completely topple the whole ease of access thing, at the worst case resulting in very minor temporary inconveniences on a once per payee basis.
Monzo have demonstrated such ideas with their proposed compliance with the code when it comes into effect for everyone. And they’re being smart about a lot of it which is good too.
Banks can take advantages of features like open banking or SCA for moving money between your own accounts as a means of verification. For anyone else, the first time you make a payment to them, escrow it for a few minutes (I’d make a case for a few hours). Let folks later revoke some payees from that if they want to (safeguard against abuse) so it does that every time. Sometimes, perhaps even most time, a few minutes is enough for folks to realise they’ve been hoodwinked.
Business and sole traders are likely to have the appropriate accounts which are more stringent, and is something the sending bank can verify. So that can resolve inconveniences on those payments too. But again, a brief escrow system is likely to impact far few folks than scam victims it would potentially save. I’d take a bit of friction here, personally. I’m not the stupid person today, but someday I might be. That’s enough a justification for me.
Instant payments are awesome when it’s to yourself or someone you know and trust, but not terribly necessary in other contexts, I don’t think. Same day is probably fast enough.
Edit: a reminder of some of Monzo’s ideas to help mitigate this type of fraud (none of which exists prior to the APP code applying to all banks rather than opt in, which is what makes them negligent IMO)
These cases are literally edge cases in a banking system that processes billions of non fraudulent instant payments every day
A person who’s been scammed could be forced into a 12 hour hold on all their payments, ie marked as vulnerable, that could be opt in (for someone who hasn’t been scammed before)
Slowing a lot more people down because of some rare edge cases isn’t something even the big banks decided to do…
Monzos success largely came from implementing instant payments in an easy way
That sounds like a nightmare! When I’ve sold stuff on gumtree, I’ve given it over to someone and they’ve transferred the money there and then - how would that work if we had to wait a few hours? Same when I paid my moving company at the end of the job. I can think of several recent times this would have been a headache.
I’m not saying for every person, every transaction. There needs to be some intelligence and common sense. A few minutes causes very little harm here.
With the moving company, they’re a company, no? It’s two fold here. First, they’ve provided you a service under a contract you’ll have agreed to by requesting their service with an obligation to pay. Don’t pay and they can take legal recourse (they know where you live)! They payment doesn’t need to be instant, and I highly doubt they expect it to be. And second, they’d be accounted for as I mentioned above, so the sort of escrow protection wouldn’t become an issue here.
The only transactions that are really going to get caught out (if you can call it that) are those marketplace transactions (like your gumtree one).
That wouldn’t be such a bad thing IMO. It restores a useful barrier between your bank and the person you’re transferring money with. That kind of circumvention completely removes any liability and responsibility from your bank too, so it’s all on you.
The thing I think about most, is that letting out the banks being 50/50 responsible, customers will likely take more risks because they believe each bank has to cough up for their mistakes.
Hard lessons are exactly that, and if people just go through life expecting rainbows and unicorns all the way, it falls to disaster.
Can the banks afford it? Probably.
Should the banks be paying out for reckless (while innocent) behaviour? Not really.
Do the banks really need to knuckle down and be a pain in the ass (stopping more payments to check legitimacy etc) to protect both consumer and industry? 100%.
It’s a tough one though, having done the job of preventing payments having these conversations, customers really do believe it’s the banks against them “stopping them spending their money freely” when actually, they intercept the payments driven by data provided in a wide range of metrics.
The banks will get smart, fraudsters will get smarter, it’s the unfortunate nature of it.
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Anarchist
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I’ve been thinking quite a bit about this recently, but I’m not sufficiently knowledgeable to be able to work out the answer.
Does fraud actually cost banks very much, in the grand scheme of things?
The way I see it, in the vast majority of fraud cases the money remains in the banking system one way or another.
If a customer is defrauded and sends money from bank A to bank B, there’s likely to another customer somewhere being defrauded to send money the other way.
Even where digital money is turned into cash it’s likely to end up in a bank account somewhere in the system (through a shop, for example).
The only way banks lose is if they have to return the money to the customer without being able to recoup it, but then most banks will be in receipt of fraudulently obtained money as much as they have to pay out.
Which is a long winded way of saying that all the money just goes around and around; it never really disappears.
Well for a start money doesn’t just “sit” in a bank. If Bank A sends Bank B money, Bank B may well have “used” that money and in returning the money to Bank A, Bank B would be down that amount of money.
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Anarchist
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Yes, but fraud doesn’t work only A to B. There will be fraud going the other way. So as much as B is down that amount, there will likely be another transaction where A is down an amount.
It just seems like an almost zero sum game for the banking system. As much as an individual bank might lose from a fraudulent transaction, they are likely to be benefiting from fraudulent transactions as well.
So the same amount of money exists in the system whether fraud happens or not.
I’m not saying that individual banks can’t suffer from fraud, just that all of the banks as a whole don’t suffer (which may explain why they need to be regulated into dealing with it - if they were all losing money from fraud they’d have made efforts to sort it out years ago).
ETA I realise I haven’t been clear. I’m saying that banks don’t suffer from fraud, they suffer because of regulation (they sometimes have to reimburse customers).
Hmm as much as you might ultimately be right that’s not how crimes work. If someone robbed £10 off me in the street and then that person was robbed of their own £10 only for the second robber to give me it after they steal it, it’s still two crimes and nothing about it “evens” it out.
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Anarchist
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Perhaps but like I said, that’s not how things work (or even should). Ultimately these are crimes and we can’t function really just because they “even out” (and I’m not convinced they actually do across all banks)
Fraud costs banks hundreds of millions, which is factored in to their risk and running costs.
I see your thought trail of bank A to bank B it’s still technically in the system, but not entity.
Then you’ve got the issue of removing those funds from the banks IE to crypto, and then moved back into the banks likely outside the country, and withdrawn as cash, and then either spent on illicit goods, or cleaned and put back into the system.
So overall it probably is a loss across the industry here, but a gain in some other country.