Barclays ‘Safe Account’ Scam Victim Receives Compensation Following Ombudsman Investigation

Mrs A, who had accounts with Barclays bank, was contacted by someone claiming to work for her broadband provider. She was told her computer was being hacked and that she needed to download software to allow the caller access to her mobile phone. Within a matter of hours, the caller (scammer) had accessed Mrs A’s online banking accounts, set up new accounts with other banking organisations, transferred over £36,000 from her Barclays accounts, attempted to transfer a further £7,000 and taken out a personal loan for £25,000.

£1000 had been transferred to bank ‘R’ (an account in Mrs A’s name, but in the scammer’s control), and £35,800 had been transferred to Mrs A’s own account with bank ‘M’ before being moved on to the scammer’s account. As a result, Barclays refused to accept any responsibility for her losses – Mrs A had effectively ‘authorised’ the transfer of her own money between her own accounts. Barclays did agree that the loan had been fraudulently opened in her name and said they would take steps to ensure it was written off and removed from her credit history.

Mrs A was not happy with her bank’s decision and complained to the Financial Ombudsman Service (FOS). FOS is an independent body set up to resolve disputes between financial institutions, such as Barclays, and their customers. An initial investigation concluded that Barclays did not need to intervene when Mrs A’s money was transferred, as it was going to other accounts held in her name.

Banks have a duty to protect their customers’ money; they can delay or block payments if they think they may be fraudulent or unusual (in amount or frequency), but in Mrs A’s case, no suspicions had been raised. Of course, this is exactly what scammers hope for and why two-stage, ‘safe account’ scams like this have emerged! Moving money via an intermediate account in the scam victim’s name draws less attention and is more likely to be successful for the scammers.

Although Barclays advised Mrs A that the fraudulent loan had been written off, she continued to receive repayment demands from debt collection agencies. It turned out Barclays had failed to cancel the loan properly.

Mrs A’s complaint was passed to a FOS Ombudsman for a final decision. They upheld her complaint, stating that the first payment (of £1000 to an account with bank R, which was under the scammer’s control) should have been refunded under the Lending Standards Board Contingent Reimbursement Mode (the CRM Code). The CRM Code “sets out consumer protection standards to reduce APP scams” and signatory firms commit to enhanced protection for their customers against exactly these types of scams.

FOS also found evidence to suggest that Barclays were aware that Mrs A could be falling victim to an APP fraud scam and that the bank did little to stop it from happening. In particular, the Ombudsman pointed out that Barclays had a responsibility to Mrs A for the money she lost via bank M, and Barclays could have stepped in to protect her from the risk of financial harm. Barclays had presented Mrs A with a ‘safe account scam warning’ at the time and also noted that these payments appeared out of character for Mrs A’s normal account history – a definite red flag. She used online banking infrequently and rarely transferred money between accounts.

As a result of the FOS investigation, the Ombudsman concluded Mrs A was “unwittingly targeted by scammers” and should not bear any responsibility for her financial loss. FOS also heavily criticised Barclays’ handling of her case. She was awarded £800 in compensation and had £11,800 refunded, plus 8% interest.

As financial industry security experts, banks have a responsibility to spot the signs of possible fraud, and it is generally accepted that banking customers are less aware of scammers’ ever-evolving tactics. Some red flags to look out for include:

• Being contacted out of the blue about your accounts
• Social engineering tactics that pressure you into acting quickly so you don’t “lose all your money”
• Impersonation of a trusted individual, such as a bank official or the police
• Being asked to download software or apps to give remote access to your computer or phone
• The use of ‘safe accounts’ – something a bank or the police would never ask you to do

Sarah Spruce, Legal Director and Head of the Authorised Push Payment Fraud Claims team, says:

“Online fraud warnings and detection processes are there to protect people, especially those who are vulnerable. We can all do our bit to look out for elderly, ill, or financially naïve friends and family who might be targeted by fraudsters and prevent it from happening in the first place.

However, fraud is on the rise and is becoming more sophisticated, so if you or someone you know has been affected, don’t feel embarrassed, you are by no means alone and help is available. Get in touch with a member of my specialist team and we can discuss your case and see if you may be able to make a no win, no fee refund claim.”

We have seen many Ombudsman decisions where banks should have done more to protect customers’ money. Our team of specialist lawyers deal with a wide range of bank negligence and FOS compensation claims, such as safe account scams and many other Authorised Push Payment fraud scams, including those involving Barclays. If you have lost money to online scammers, we can examine your case and advise on possible ways to get your money back.