Banks not liable in most phone scams, Ombudsman reports

A new warning to advise vulnerable relatives, friends and neighbours over the risk of phone scams has been issued by the Financial Ombudsman Service on the back of research published today into the scale of the problem.

“Vishing” or “no hang-up” scams, where fraudsters pose as the police or banks to deceive consumers, are a particular problem, and victims may have no redress, as in only 37% of complaints against banks following such scams has the Ombudsman held the bank to have been at fault.

Typically such calls attempt to persuade customers that their account is at immediate risk and that they need to move or withdraw money. The callers can sound plausible and talk people into making online transfers, revealing their pin numbers or even handing over their card to a courier who then takes it to the fraudster.

“No hang-up” scams involve the fraudster not putting the phone down after making the fraudulent call, so that if the customer then tries to call the bank they are still unwittingly speaking to the fraudster.

The study suggests that people aged over 55 could be up to more times more likely to be caught out by these practices.

On a review of 200 cases involving a no hang-up scam, the report found that 80% of victims were over the age of 55, and one in five was over 75. Losses totalled more than £4m, with 38% of people losing between £5,000 and £14,999, 20% between £20,000 and £49,999, and some more than £100,000.

Chief ombudsman Caroline Wayman commented: “One of the most consistently challenging areas of our work is dealing with people who have been affected by financial fraud. These are extremely cruel and convincing deceptions and consumers are tricked into believing they are protecting their money, when in fact it is being stolen.

“Scammers are relying on people’s vulnerability, and vishing is particularly insidious in exploiting this. This is why we really want to share what we are seeing in the complaints we handle and encourage people to get talking about scams with their friends and relatives so they become more alert to the risks – stopping the fraudsters in their tracks.”

The report comes in the wake of heightened alerts to solicitors' practices, which are the subject of similar attacks by criminals targeting client funds and their transfer.