I seldom have any reason to praise the behaviour of a bank. Bank managers may once have been local citizens of impeccable standing, who were acquainted with the local businessmen and knew who could be trusted to pay a loan back and who could not. But nowadays, they are faceless apparatchiks drafted in from HQ and forced to work to strict and often irrational rules. For example, if (like me) you have never been in debt, you won’t have a credit record, so your bank won’t give you a credit card, even though your lack of such a record proves to any normal human being that you hate being in debt and can therefore be relied upon to pay off debts promptly. On the other hand, banks have proved themselves happy to sell fake insurance and to help scammers empty your bank account.
The most prevalent kind of banking fraud these days is called “authorised push payment fraud”. Push payment is a banker’s term for payments that are instigated by the payer rather than the payee, for example a standing order compared to a direct debit. Push payment fraud involves a very clever and complex scam in which an account holder is persuaded that his or her account is compromised and coached step by step into transfering the money into a supposedly safer place. Needless to say, the new account is actually controlled by the fraudsters and is only transitory. It and the money transferred into it will vanish within minutes. The victims are very often old people, who are considered to be easy targets. People have been swindled out of their life savings in this way.
Initially banks refused to do anything about push payment fraud. They said that these transactions had been carried out by the lawful account holder (a fact which was not in dispute) and that it was their duty to carry out that person’s instructions regardless of what they might be. Some people managed to get money back by kicking up a stink; the involvement of the BBC’s Money Box programme often persuaded a bank that the bad publicity was not worth the money they were saving by refusing to pay. But what was most reprehensible in these cases was that the transactions were allowed to go through in the first place. The banks never seemed to ask why on earth an aged and clearly panicky customer wanted to close down an account in such a hurry.
I myself was approached by one of these scammer gangs last year. I received a telephone call from a man with a very sympathetic voice and an RP accent who claimed to be an officer from the Hammersmith branch of the Metropolitan Police. He told me that my bank card had been cloned and that a man had been arrested for using it. He then suggested that I contact my bank to determine if my account had been compromised in any way. If I had taken the bait, the scammers would have held the line open and my next call would have been answered by a man with a Scottish accent who would have guided me through the actual transfer process. The “banker” in these scams always has an Edinburgh accent because it has been shown that people instinctively trust the Scots in all matters concerned with money. Fortunately I had heard of the modus operandi of these people and simply put the phone down. It was pretty obvious to me that if the police really were involved, I would hear from my local police branch soon enough. Of course I never did.
But now, it seems, some banks have decided to be a bit more cautious when they get an unexpected request to close down an account and transfer all the money elsewhere. At least the Co-operative Bank does so and I take off my hat to them. This bank is part of the wider Co-operative Movement, so perhaps it has somewhat higher ethical standards than a commercial bank.
I came to have an account with them almost by accident. It was originally opened with the Britannia Building Society, which the Co-op took over some years ago. I like building societies, partly because of their non-commercial ethos and also because they have local branches where the people know your face. I consider that this makes fraudulent transactions rather more difficult than they are in a bank. But after the takeover, the branch network was closed down, giving me only remote access to the account. Since I dislike this way of banking, I decided after some thought to close this account down completely and move the greater part of the money into one of my other long-term investments.
The process was typically long-winded with much waiting and listening to dreary music on the phone, as several different departments were involved. Of course I had to establish at the outset through various security questions that I was the person I claimed to be. A very nice young woman with an Irish accent then did the actual work of closing the account and entering the details of the bank account into which the money would be transferred. I would have preferred to receive a cheque by post but apparently no one is issuing those any more. And then something rather interesting happened: the woman told me that the account was now closed but that the actual money transfer had been blocked until I answered some further security questions.
I was transferred back to the security department and put through a series of questions which were clearly designed to detect push payment fraud. How long had I been considering closing this account and transferring the money? Did I have a specific reason for doing so? Had anyone told me to do it? Had I been put under pressure of any kind? Was anyone currently with me whose presence might be inhibiting my replies? How long had I held the account into which the money was to be transferred? And did I fully understand what I was doing and what the result would be? It was all done very politely and with occasional apologies, to which I replied that I was very glad they took the matter so seriously. Finally the transfer was authorised and I hung up. A couple of working days later, I checked and found the money in my bank account.
The fact that I carried out the transaction by voice over the phone may also be significant. In most push-payment fraud cases, the transaction that closes the account and transfers the money is carried out electronically, and the only telephone conversations that the victim actually has are with the fraudsters. Even so, an automatic temporary block on this type of total-account transfer until a separate call had been made to the customer’s phone number 10 minutes later for validation would be a simple, low-cost and safe way of putting the kibosh on a very nasty type of fraud.
I wonder why commercial banks not do something like this on a regular basis. I assume that they do not, or push-payment fraud would not be as common or widespread as it is. In fact it could be largely eliminated at source, along with the heartbreak and self-loathing that often follow it.
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