Tag: Banking

Banks urged to clear up confusion over refunds for coronavirus cancellations

The banking industry is taking an inconsistent and confusing approach when dealing with refund claims for customers who have reached a stalemate with a business over refunds for coronavirus cancellations, new Which? research has revealed.

With huge numbers of consumers deeply dissatisfied with travel companies and other businesses asking them to accept credit notes or rebooking instead of offering refunds, Which? has heard reports from frustrated bank customers who have had claims turned down.

This includes one customer who was denied a refund of a £2,200 payment split between Halifax and Metro Bank cards for a cancelled ski trip and another left £750 out of pocket after RBS rejected her claim. In both cases the customers were told a refund was not possible because they were being offered credit notes or vouchers.

The cases prompted the consumer champion to investigate how banks are handling claims under two forms of consumer protection.

The first of these protections is chargeback, which covers all card payments. While not a direct consumer right, it is a process provided under card schemes which reverses a transaction if a customer is not able to resolve a dispute with a business for a variety of reasons.

The second is Section 75 of the Consumer Credit Act 1974, a legal protection for credit card users on purchases of more than £100 and less than £30,000, which gives the customer a claim against the card issuer as well as the retailer or trader for the goods or service supplied.

Despite guidance issued by Mastercard and Visa stating that customers are able to pursue the chargeback route if they are offered a voucher or the option to rebook, when Which? asked banks to confirm if they would attempt to process refunds, MANY STATED THAT CLAIMS WOULD NEED TO BE HANDLED ON A CASE BY CASE BASIS. The same applied to Section 75.

Which? is concerned that a failure to provide even general information about the circumstances where a claim could be successful risks leaving consumers unaware of vital consumer protections that could help them get their money back at a time when people’s finances are significantly stretched.

However, some banks did provide clearer information about the prospects of consumers getting their money back. In relation to chargebacks, Virgin Money (Mastercard) made it clear that if the alternative arrangements are not covered in the terms and conditions, they would normally expect a chargeback to be successful.

Starling Bank (Mastercard) and Lloyds Banking Group (Mastercard and Visa) said that they will initiate a chargeback where the offer of vouchers or free rebooking is not deemed suitable by the customer.

But Which? has also heard from a Halifax customer who was turned down for a chargeback request for a cancelled holiday based on these circumstances, despite the bank being part of Lloyds Banking Group – raising fears that the rules are not being applied evenly.

The number of people using the free Which? chargeback and Section 75 tool has shot up to 10,000 in March and April so far, compared to 1,000 in January and February of this year.

This highlights how many people are getting nowhere with businesses on refunds, often in cases where a significant amount of money is on the line. Amid confusion over the protections the banks offer in these circumstances, Which? is calling for the industry to be more upfront about the situations where chargeback and Section 75 are likely to be appropriate for consumers in relation to coronavirus-related cancellations. It believes banks should follow the lead of those in the industry who have committed to providing customers with the best prospect of getting their money back.

Gareth Shaw, Head of Money at Which?, said: “While it is a very difficult time for businesses, the coronavirus outbreak has also put people’s finances under considerable pressure, and they deserve to get their money back if they want a refund for a cancelled event or trip, rather than a voucher or the option to rebook.

“However, there is clearly confusion about the circumstances which allow banks to help their customers achieve this. There needs to be greater clarity and consistency about claiming through banks, and the industry should ensure that all bank customers have a fair chance of getting their money back.”

Which? – Banks are denying reimbursement to innocent scam victims, despite new rules

Which? is concerned by early signs that some of Britain’s biggest banks are refusing to reimburse blameless victims of devastating transfer fraud, despite the introduction of new industry standards intended to protect fraud victims.

Banking customers lose life-changing sums every day through bank transfer scams – with Which? even hearing from a victim who lost £500,000 through his restaurant business.

It was hoped that the introduction of a voluntary industry code in May 2019 would ensure that all blameless victims get their money back, finally reversing the trend of people being left out of pocket.

But Which? has heard from a number of people who say they have been denied reimbursement unfairly – with a worrying trend emerging of banks relying on fraud warnings to justify not refunding customers. These decisions from banks fly in the face of the voluntary code most banks have signed up to, which pledges to reimburse all blameless victims.

It is now much more common for online or mobile banking customers to see fraud warnings when transferring money, as banks seek to meet new code standards by introducing a range of different features aimed at making a customer think twice about whether they are being scammed.

However, a Which? survey found that almost half (49%) of people are not even aware that new fraud warnings had been introduced by banks – further evidence that victims should not be arbitrarily turned down for reimbursement because they have “ignored warnings”.

Case study – Michelle, 38, London

Which? spoke to Michelle, 38, who lost almost £33,000 after responding to a text message about a ‘suspicious payment to Airbnb’ in August 2019. It appeared to come from Lloyds Bank’s usual phone number, sandwiched between two genuine messages, so she called the number supplied. Over the course of an hour Michelle was persuaded to transfer her money to a new account, in the belief that hers had been hijacked by criminals.

Lloyds says although it has sympathy for Michelle it will not reimburse her, on the grounds that she ‘did not take sufficient steps to verify that either the text message or the person she spoke to on the phone were genuine’, and that she authorised the payments despite receiving ‘specific warnings’ stating that Lloyds would never ask a customer to move money to other banks.

Michelle had no reason to believe the text was fake, and Lloyds is yet to explain the ‘sufficient steps’ she ought to have taken. And, while she did notice an online warning about fraud when she made the first payment, the criminal on the phone was able to quickly dismiss her concerns.

She said: “It was very urgent and compelling. My two-year-old daughter was running around while I was on the phone to them for an hour. I saw the warning about Lloyds never asking me to move money into a safe account and flagged this over the phone. They assured me that these were not “safe” accounts but “new” accounts.”

Which? has advised Michelle to escalate her case to the Financial Ombudsman Service.

Which? – working with two leading academics – also analysed the effectiveness of banks’ fraud warnings, to establish whether they are adequately ‘understandable, clear, impactful, timely and specific’ – as set out in the code.

The experts raised concerns about elements of the warnings from some of Britain’s biggest banks.

One researcher voiced concerns over the ‘generic’ messages displayed by First Direct, HSBC, Lloyds, Natwest and Royal Bank of Scotland. Petko Kusev, from Huddersfield Business School, said that it was perfectly rational for customers to ignore generic information when conducting bank transfers.

A second researcher, Patrick Fagan from Goldsmiths University, suggested that some warnings can come too late, as once people have already been targeted by scammers they typically commit to seeing the action through. Mr Fagan suggested that banks use targeting and personalisation to make these warnings more persuasive.

Which? supports the introduction of fraud warnings as an important defence in preventing scams. However, Which? believes that banks must prove their fraud warnings are fit for purpose and should not be used as a means to simply deny reimbursing blameless victims. If a bank can’t prove its warnings are effective then the customer should not be deemed at fault.

The consumer champion also wants the industry code to be made mandatory for all current account providers as many providers still haven’t signed up to the vital fraud protections.

Jenny Ross, Which? Money Editor, said: “People are losing life-changing sums of money every day to devastating bank transfer fraud – so it’s shocking that some current account providers still haven’t signed up to offer their customers vital protections.

“All banks must prove that their online warnings are up to scratch – especially if they are denying victims reimbursement, as we’ve seen in some cases.”

The consumer champion put banks’ fraud warnings under the spotlight, and found:

  • Asking customers to tick a box to confirm they have understood the warning could prove more effective than warnings that take consent for granted.However, Which? believes this is still a low bar for establishing consent.

  • Nationwide’s ‘STOP AND THINK’ message ahead of a transfer was deemed to be effective at providing customers with concrete, clear imperatives.

  • Which? is critical of HSBC’s approach that gives customers the option of hiding warnings, raising the likelihood that customers might not see them at all.

  • Meanwhile, customers could easily miss important wording and rush through a transfer if it is towards the bottom of a screen, such as First Direct’s warning.

Banks that have not signed up to the code:

Bank of Ireland, Citibank, Clydesdale and Yorkshire Bank, Danske Bank, First Trust Bank, Monzo, N26, Tesco Bank, and Virgin Money. Although TSB is not a signatory of the code, it promises to reimburse all victims of fraud under its ‘Fraud Refund Guarantee’, launched on 14 April 2019.

The Lending Standards Board is responsible for overseeing the new voluntary code and assessing how firms are implementing the standards set out in the code.

Letters: Brainwashed Britain?

Dear Editor

The banking organisations, through incompetence, nearly made the country bankrupt but the debt was passed on to the people to shoulder. They had to accept a lot of unemployment, higher prices in the shops, frozen wages and severe cuts to public and social services.

To avoid any resistance, the authorities launched a campaign of diversion and blame. Everyone can remember how different sections of society were blamed in turn: the unemployed for not working, the disabled for being on benefits – all were targets to be blamed.

This went on for many years and people had taken enough of austerity; there was a growing mood for change, calling for the authorities to take the banking industry into public ownership and impose tighter controls over financial institutions.

This fast-growing popular demand was greatly feared by the political elite. It took them quite a while to develop an idea to divert these demands, but after eight years they were successful. It was a continuation of the blame game, but this time not blaming our own people but any and all those coming from Europe – and the idea of a Referendum was born. They concentrated on three main issues: Control, Laws and Migration.

  1. Since the referendum we have lost thousands of people wh o formerly worked in our social services and the NHS: these services are now struggling to keep going.
  2. Most laws from the EU have been beneficial, adding to workers’ rights and conditions of employment. EU laws also protect the environment. The UK Parliament as a law-making body remains in control.
  3. This is the most mentioned issue. For whom are the demanding control? The British people have already said they wanted the banks to be publicly owned and demanded tighter controls on financial institutions. Control is such a loose word that can be manipulated by individuals for the benefit of the few.

The promoters of the referendum conducted a continuous campaign of national ‘brainwashing’. Putting relentless pressure on people is not a new idea, as a look back at recent history will confirm.

But unfortunately nearly 50% of the population were aware of the implications of a break with Europe that is our biggest trader of imports and exports, and closest.

A. Delahoy,

Silverknowes Gardens

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Bank branch closures: Scottish Government calls for a minimum provision of banking services to be introduced.

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Beating the big boys: Castle Community Bank raises interest rates

Castle Community Bank, the Edinburgh-based not-for-profit financial institution, has raised its fixed term rates for savers. It now offers 1.65% for two years and 1.75% for three years for fixed term deposits of up to £15,000 – a much better rate than the big banks currently offer.  Continue reading Beating the big boys: Castle Community Bank raises interest rates