Grace was at home with her two young children. Her husband was working abroad at the time. She received a call from someone saying they were from HMRC and she needed to pay a tax bill or she would be deported and a warrant for her arrest would be issued.
What happened?
Grace was told she needed to pay £15,000 to settle the bill in a series of small payments.
Feeling like she had no choice – and worried about what would happen to her family if she didn’t pay – Grace followed the instructions she was given whilst the fraudster remained on the phone.
To make the payments Grace first had to move all the money in her husband and her savings account with the bank to their current account. She then set up a new payee as instructed and made four payments to the new payee, each payment was around £2,500.
The fourth payment was blocked by the bank. It couldn’t tell us why and it didn’t contact Grace at that point. As the fourth payment hadn’t been received, the fraudster told Grace she needed to set up another new payee to finish the payments. Grace had to transfer more money from another account with the bank to fund these payments. Following that she set up the second new payee and sent a further two payments to that second new payee.
After she completed the payments, the phoneline went dead. Grace thought something was wrong and called her bank. The bank explained she’d been the victim of a scam, but said it wouldn’t refund her money as she had made the payments herself.
What we said
We looked at the pattern of transactions and the relevant industry guidance and good practice in place at the time including the the British Standards Institute: PAS 17271:2017 - Protecting customers from financial harm as a result of fraud or financial abuse – Code of Practice which has been in place since October 2017.
The aim of the BSI code is to help banks to protect customers from financial harm by identifying good practice in systems and procedures to prevent and detect fraud.
Specifically it says banks should have measures in place to detect suspicious transactions or activities that might indicate fraud. The BSI code includes examples of account activity indicators that might suggest a customer could be the victim of a scam and that the bank should contact the customer to verify the activity.
We thought the pattern of activity on Grace’s account was the type of activity the BSI Code of practice warned against and so we thought the bank should’ve done more to intervene here. We were persuaded that if the bank had intervened and contacted Grace to discuss the activity it would’ve discovered Grace was being scammed and it could have prevented her sending any further money to the fraudsters.
Following our investigation, the bank told our investigator that it would refund all of Grace’s money together with interest at 8% per year simple. This included the money she sent before the point it should have intervened, as it would still have been possible to recover this money from the fraudsters' account at that point. Grace and her husband were happy to accept the bank’s offer.