Every day the news has stories of criminals ruthlessly scamming people out of their savings. Fraud is now the second most common crime after theft.
Do scammers target older people? What makes older people at risk? What role do banks have in stopping scams? Are banks making progress in protecting their customers?
Scams: everyday devastation
There are many types of scam, affecting people of all ages and backgrounds. Some scams are so convincing they catch out police officers.
There are alarming stories of bank payment fraud, romance fraud, investment fraud, postal scams and doorstep scams – all of which are particularly likely to affect older people.
Some fraudsters target older people who are so lonely that they will open the door, reply to a letter or answer the phone. Some scammers exploit people who lack mental capacity to understand what they are buying or signing up to.
Many victims lose thousands of pounds. In the worst cases, they lose their life savings or have to sell their home.
Scams can also destroy people’s physical and mental health, confidence and relationships. The experience of being scammed pushes some people into needing social care support for the first time. This means they lose their independence and care costs eat away at their remaining savings (which is why Independent Age is calling for free personal care).
Banking on better protection
Banks have a central role in tackling scams. They are in a better position to spot and stop scams than their customers, especially those who are vulnerable.
Three-quarters of the public (77%) agree that ‘Banks should take more responsibility for their customers losing money to scams by reimbursing their losses more often.’
This rises to 9 in 10 (88%) of people aged 80+.
Banks’ systems are often not safe enough. Fraudsters find clever ways to impersonate banks and trick victims into making payments to them. People lose over £11,000 on average to these scams. People aged 65+ are most likely to be victims. Banks need to up their game.
New bank code
Consumers lost £228m by authorising a payment which turned out to be a scam, in 2018. Which? made a super-complaint about this, highlighting the lack of protection for consumers. In most cases, banks refuse to refund victims, saying they should have taken more care. This led to a steering group of banks and consumer bodies producing a code of conduct for banks, published in May.
There is much to welcome in this new code.
First, it commits banks to doing more to protect their customers, including:
- giving better warnings to customers
- delaying or even stopping suspicious payments
- acting quickly when a scam is reported to get money back, and
- stopping fraudsters opening accounts.
Second, banks will reimburse customers who are scammed. However, customers have to meet certain standards of behaviour, e.g. they acted on the bank’s warnings, they were not ‘grossly negligent’.
And third, the code considers whether the customer was vulnerable. Banks will provide extra protections for vulnerable customers and reimburse their losses. For example, someone may be unable to protect themselves because they are recently bereaved or living with dementia.
However, these extra protections apply on a case-by-case basis – not everyone living with dementia is always considered ‘vulnerable’, for example.
Not job done
This new code will hopefully protect people from life-changing scams. But it is too early to tell.
There will be arguments over whether the customer or bank did what is required under the code – whether they are ‘to blame’. There will also be disagreements over whether the customer is considered ‘vulnerable’.
These disputes will determine whether or not banks reimburse victims.
So, we need to review the code over time to see how much protection it actually provides for consumers.
Further, the code only tackles some types of scam.
It only applies to scams where the victim authorised a bank payment. Many other scams don’t involve such payments, such as doorstep scams involving cash.
Lastly, it is not just banks who need to up their game. Some scams result from mobile or internet companies losing their customers’ data. The Government needs to take a wider view and ensure that all parts of the system – banks, phone companies, police and local authorities – are working together to tackle scams.
In our ageing society, we need to stamp out all kinds of scam so older people can live with financial security, health and independence.
Warning: Consumers still need to be careful!
No-one should assume the new bank code means they will get their money back if scammed.
Learn how to spot scams with our guide Scamwise: Spotting, avoiding and reporting scams.
Phil Mawhinney is a Policy Manager at Independent Age.