Banks must do more to prevent cyber-related fraud, MPs say

The Commons Public Accounts Committee (PAC) said banks need to take more responsibility for preventing cyber-related fraud which is now the most common crime in England and Wales.

The PAC also called for much greater transparency from banks as the true extent of the problem is not known with only around 20% of incidents reported to the police.

The study states: “Banks do not accept enough responsibility for preventing and reducing online fraud and there is no data available to assess how well individual banks are performing.

“Banks can refuse to reimburse customers who have been scammed and ‘voluntarily’ transferred money, and shifting more responsibility onto banks for scams is likely to make them better at protecting customers.”

The report also hit out at the Home Office for its “slow response” to the growth of online fraud, and described the police approach as “inconsistent” across the country.

The PAC said information campaigns aimed at protecting people had been “ineffective” and under-resourced.

MPs warned that card not present fraud, where criminals use stolen card details, has doubled in five years to 1.4 million known incidents in 2016.

The study found that between 40%-70% of people who get scammed into transferring funds to fraudsters never get their money back.

The PAC called for banks to use technology better to return defrauded money to customers by locating “mule” accounts.

“Banks have different policies for under what circumstances to refund money. Banks are also reported to be holding at least £130 million that has been frozen because it is fraud-related, but which cannot be accurately traced and returned to victims, often because it has been passed through numerous ‘mule’ accounts,” the report said.

Despite the perception that online fraud mainly impacts on the elderly and vulnerable, the report said young people are increasingly likely to fall victim to scams due to their use of social media.

Police told the PAC: “Young people are probably more vulnerable to fraud than older generations as they have a very different approach to personal information.”

The report welcomed the creation of the Joint Fraud Taskforce in 2016, but added: “The Government’s work in this area for over 10 years appears not to have led anywhere.”

Committee chairwoman Meg Hillier said: “Online fraud is a virulent and unprecedented threat that has taken hold rapidly, causes untold misery and costs individuals and businesses billions of pounds each year.

“Banks in particular need to step up, take responsibility and focus sharply on protecting and informing their customers.

“Technology is clearly critical to combating cyber-crime, and developing effective common defences should be a priority. Policing must also be more consistent.

“The public cannot be left in the dark. Online fraud affects people of all ages and backgrounds. Young people are increasingly likely to fall victim to a crime which is perceived primarily as affecting the elderly and vulnerable.

“The Government must get better at explaining the tricks employed by fraudsters to target different groups, and set out clearly the action it is taking to tackle them.”

The report said banks should be given minimum standards to follow and be required to report to the Government on their performance in combating crime as the figure of two million cyber-related fraud incidents costing £10 billion in 2016 is an estimate due to lack of clear information.

Despite the Government acknowledging there is an “enormous amount to be done” to combat fraud, it currently relies on voluntary participation by the financial industry, the report states.

A Government spokesman said: “We do not recognise the European Commission’s estimate of alleged duty loss. We take customs fraud very seriously and we continue to evolve our response as new threats emerge.

“We will carefully examine the formal notice from the Commission and respond in due course. The UK intends to continue to work closely with Olaf and the Commission on customs fraud.

“HM Revenue & Customs has a very strong track record for tackling evasion and rule-breaking of all kinds, securing a record £28.9 billion last year that would otherwise have gone unpaid.”