Fraud victim's 18-month fight for £80,000 refund
When Carol Alexander fell victim to an £80,000 fraud, the "huge trauma" of it left her in shock for days.
Carol had the money stolen from two accounts - one with a bank and one with an electronic money institution (EMI).
But while the bank refunded her within 24 hours, it took her 18 months and a ruling from the financial ombudsman to get a full refund from the EMI.
New regulations due to come into effect in October will offer far stronger protections to most victims of fraud.
With less than six months to go, the financial watchdog, the Payments Systems Regulator, is warning smaller firms, including EMIs, to make sure "their houses are in order".
'I couldn't sleep'
In October 2022, Carol was targeted by criminals using the so-called "energy rebate scam", which exploited people's concerns in the run-up to a sharp rise in the cost of energy.
By innocently responding to a text message, Carol unwittingly gave scammers just a handful of personal details, which they then used to manipulate and trick her into thinking her money was at risk.
Following up with phone calls purporting to be from her bank's specialist fraud team, the criminals groomed Carol and took control of her accounts.
"I was thinking about it all the time and I couldn't sleep at night," says Carol, who is from Hove, East Sussex.
She had nearly £17,000 stolen from her Santander account and £63,000 taken from her account with Tide, an EMI.
EMIs are regulated by the Financial Conduct Authority, but cannot describe themselves as banks because they do not have a banking licence.
Some of the biggest and most well-known EMIs include Revolut and Wise.
'Like night and day'
In Carol's case, she says the difference in how she was treated by her bank, Santander, and her EMI, Tide, could not have been more stark.
"The difference... was like night and day," says Carol. "The bank was professional, they sent me details of remote access scams, they said that's what had happened. [It felt to me like] the EMI basically had no systems in place."
Santander refunded the money the next day and apologised.
After six weeks Tide refunded £13.10, saying that was all it had been able to recover, and closed the case.
It recovered a further £20,000 two months later but only refunded the remaining £43,000 in April this year - 18 months on from when the fraud took place - after Carol took her case to the Financial Ombudsman Service, which ruled in her favour and ordered Tide to refund the money, plus thousands of pounds in interest.
'Really big' changes
Carol's experience is exactly why the Payment Systems Regulator is bringing in changes this October under the Mandatory Reimbursement Requirement.
Claire Simpson from the watchdog told the BBC these new rules will mean victims of fraud are all treated the same, a so-called "equivalence of service", regardless of where they keep their money.
"This is really big. We think this is a really, really significant step in both protecting customers from becoming victims of fraud in the first place by making sure that [firms] are incentivised to protect their customers, but also to ensure that when customers do become victims of fraud they are reimbursed in all but exceptional circumstances."
What are your rights if you are a victim of fraud?
The Financial Conduct Authority (FCA) regulates financial services in the UK
Customers can complain about any regulated firm (including banks and EMIs) to the Financial Ombudsman Service (FOS), which can settle disputes and order firms to pay compensation
Most High Street banks have signed up to the Contingent Reimbursement Model (CRM) code designed to protect customers from authorised push payment (APP) scams
The CRM will be superseded by the Mandatory Reimbursement Requirement from 7 October 2024
Unlike the CRM, which is a voluntary code, the new regulations are obligatory
They will cover the vast majority of UK money transfers up to £415,000, with the exception of international transfers or those involving cryptocurrencies
Refunds will be split 50-50 between sending and receiving firms
"This is a complete change in the landscape. It's incentivising these firms to stop fraud before it happens to us," said Arun Chauhan, a solicitor and trustee of the Fraud Advisory Panel.
"The smaller firms (EMIs) are growing very quickly, they have some great products. But the people who look at the fraud - there aren't enough of them - so that's where they're having to up their game.
"One thing about the smaller firms though is they are more nimble, they can change quickly and that's what we're seeing - they're sprinting to get ready [for the changes]."
Tide said it was sorry for the stress Carol suffered in her case, that it was always enhancing its anti-fraud systems, and had further improved its fraud prevention capabilities in the time since Carol's case.
UK Finance, which speaks for hundreds of financial firms, said: "Different firms will be at different stages, but everyone is working hard to be ready."
It added: "We need to continue the focus on stopping fraud in the first place and other sectors, who bear no cost of reimbursement, need to do much more to stop the fraud that is starting on their platforms and networks."
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