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Rosie Murray-West
By
April 25, 2019

Fraud Guarantees: A New Customer Favourite

  finance

banking fraud guarantee

TSB Bank’s new ‘fraud guarantee’ promises to be a hit with customers, who say they would switch to banks that guarantee to refund victims.

 


 

Consumer Intelligence’s research shows that over a quarter of us has fallen victim to some form of banking fraud, with many stating that their bank was unhelpful or did not pay the money back.


Nearly three quarters felt that a fraud guarantee was important or extremely important, and 64% would consider switching banks to get one.


TSB is trying to rebuild its image following huge problems with its IT systems, and the chief executive, Richard Meddings, says it is about “doing the right thing.”


Under the new guarantee, customers who are tricked into authorising payments to fraudsters will be refunded, as well as those who have unauthorised transactions on their accounts. These transactions, known as ‘ authorised push payment fraud’ accounted for over £350m of fraudulent transactions last year.


The bank is the first to offer such a guarantee, but Andy Buller, from Consumer Intelligence, says that the figures show that consumer appetite for such guarantees is huge.


“Bank fraud is a growing problem, and scammers are becoming very sophisticated,” he says. “Our figures show that huge numbers of people are being affected and even more are hoping for peace of mind that, if they were, their bank would back them.


According to Consumer Intelligence figures, 26% of people have fallen victim to banking fraud. Although 78% of people said that their bank was ‘very’ or ‘quite’ helpful, a substantial minority (15%, said their bank was ‘very’ or ‘quite’ unhelpful.

 


If you have been a victim of fraud, how helpful was your bank?

 

5 – Very helpful

54%

4 – Quite helpful

24%

1 – Very unhelpful

9%

3 – Not particularly helpful

7%

2 – Quite unhelpful

6%

 

 

A similar percentage (14%) said that they had lost all, or some, of their money to fraud.


If you have been a victim of fraud, did the bank refund your lost money?

 

All of it

86%

Some of it

8%

No

6%

 

Apart from TSB, no other bank currently offers a Fraud Guarantee. However, a voluntary code is in place from May 28, and those banks that sign up are bound to refund fraud victims of authorised push payment fraud provided that the customer cannot be proved to be at fault.


The Consumer Intelligence study revealed that almost half of consumers believed that banks should always bear the brunt of fraud, and refund victims in every case, while a further 46% of people believed that fraud victims should be compensated by banks, provided that they have not been careless.


Should banks refund customers’ money when fraud has taken place?

 

Yes, always

49%

Yes, but only if you have not been careless

46%

I don’t know

3%

No, it is your problem

2%

 


Consumers attach huge importance to having a fraud guarantee, with 84% stating it was extremely or very important, and almost nine in ten people would definitely switch or consider switching if one was offered.


How important is a fraud guarantee to you?

 

5 - Extremely important

60%

4

24%

3

12%

2

2%

1 – Not at all important – it’s not something I think about

2%

 


Would you switch banks for a fraud guarantee?


I would consider it

64%

Yes – definitely

25%

No

11%

 

 

“These figures are pretty striking,” states Andy Buller, banking expert at Consumer Intelligence. “With the fraud guarantee, TSB has hit on something that is truly popular with consumers. Guaranteeing customers against fraud could be costly, but, as this study shows, it is likely to be hugely popular with customers, who definitely see this peace of mind as a reason to switch.


Even with a voluntary code in place for other banks, it will be interesting to see how this lifts the fortunes of TSB, and whether other banks follow suit. Bank switching is famously difficult to achieve perhaps the fraud guarantee will succeed where higher interest rates and other goodies have failed.”

 


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