Banks not liable for vishing, warns FOS

6 July 2015, 20:36   By Samantha Smith

PEOPLE need to be made more aware of vishing and the fact that banks are often not responsible for any losses that occur, the Financial Ombudsman Service (FOS) have warned.

card payment on telephone
Credit: khunnok studio/

They say that in around two thirds of the cases brought to them between mid-2012 and the end of 2014, the bank wasn't liable and therefore had no obligation to refund the victim.

The FOS is also warning of the increased risk vishing represents to older people; of the cases they investigated, 80% involved someone over the age of 55, with one in five being over 75.

And for a crime where there's little chance of getting the money back, the sums involved are large: about 60% of the cases the FOS looked at involved losses between £5,000 and £50,000.

Not our fault

More than half of those who complained to the FOS did so because they felt the fraud was the bank's fault and that they should have been refunded.

The next biggest cause for complaint was that the bank should have done more to prevent the fraud in the first place.

complaints against fraud

SOURCE: Financial Ombudsman Service, Calling Time on Telephone Fraud, 2015

But banks are only liable when the person being defrauded can show it wasn't them that made the transaction, and that they haven't been negligent.

The problem with vishing then, is that it gets the victims to carry out the transactions themselves - and when large sums are involved, to confirm they want to go through with the payment.

As many banks flag up large or unusual payments, victims will often be contacted by their real bank after making a payment in order to confirm it should go ahead.

This is the moment anyone with suspicions could put a stop to the fraud. But most don't realise and will instead confirm their part in the proceedings - making them, not the bank, liable for the money lost.

Please hang up and try again

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Vishing is shorthand for "voice phishing" - fraud carried out over the phone.

Vishers use numerous tricks, which include number spoofing - disguising the incoming number to look like a recognised or trusted caller.

But the most fraudsters make use of a quirk with UK landlines that means that when someone calls us, the line stays active when we hang up.

Picking up the phone again - say, to call our own bank - simply reconnects us to the person we were speaking to before.

Ofcom has charged telecoms companies to remove the "no hang up" feature on UK landlines by the end of 2015.

But in the meantime the advice is to hang up and use a different phone to call out, or wait at least five minutes before picking up the landline again.

There's more on how to avoid becoming a victim - and what to do should that happen - in our guide to telephone scams here.

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The FOS use the example of "Mr H", who was called by someone claiming to be from the police saying his debit cards had been compromised.

Mr H promptly dialled his bank's number, not realising the line from the fraudsters was still open and that he would be speaking to them again.

Acting as staff at the bank now, they asked him to key in his PIN for verification and confirmed the compromise. Then, while he was still on the phone, a "courier" arrived to take the affected cards away.

We'll collect it

Couriers account for a surprisingly large number of the scams.

Almost a quarter of cases involved someone acting as Mr H had and handing over their cards, or making a withdrawal and giving the cash to a special courier.

But the majority of the cases the FOS investigated involved making an online transfer of some sort - usually to a "safe" account.

vishing fraud transfers

SOURCE: Financial Ombudsman Service, Calling Time on Telephone Fraud, 2015

The FOS also found that most of the cases they looked at involved the Faster Payments system, which requires a sort code and account number - but not the name of the account holder - to make the transaction.

According to the Payments Council, more than 100 million transactions are made using the service each month, and banks transferred more than £900 million using Faster Payments in 2014.

But the extent of the checks on the part of the bank sending the payment is that the request is genuine, and that there's enough money to cover it.

Being almost instant, they can't be cancelled once they've been submitted for processing - and by the time someone realises they've been conned, the fraudsters can have used Faster Payments to move the money somewhere else.

Recovering funds

But that doesn't mean it's not possible to get at least some of the money back.

The FOS report includes details of a woman who transferred money to what she was told was a safe account - but after talking to her family realised she'd been conned.

When she called her bank to report it, "they immediately called the bank which had received the fraudulent funds and it was able to block the account".

Between the actions of the two banks, she got back 70% of her money.

In the 37% of cases where the FOS did find in favour of the people making the complaints, it was usually because of customer service failings on the part of the banks involved.

Some people were told incorrectly that they'd be eligible for a refund whether they were or not; others complained about the length of time it took for their bank to get in touch regarding recovery of the money or whether they would get a refund.

But in these cases it was more likely that the FOS asked the bank to pay compensation for the additional distress - not for the money lost to the scam.

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