A recent story on the BBC suggested that scammers targeting consumers with vishing attacks are quite likely to get away with it. Apart from being a silly word derived from another, equally silly, word (phishing), it’s a serious crime.
Let’s call it by its proper and serious name – telephone fraud. In effect, criminals call up unsuspecting victims and by impersonating police officers, bank officials or others are able to con them out of cash – in some cases, quite a lot.
There are several scams, some involve duping the victim into giving away PINs or passwords, arranging collection of cash in person or simply convincing people to move money from their account into one set up by the criminals. The success of these attacks depends on the social engineering skills of the perpetrators and the gullibility of the victims.
But according to the BBC’s story, in nearly two thirds of these cases, the banks did not provide compensation for losses, according to the Financial Ombudsman Service (FOS). This was from a sample of 220 cases, some in which victims lost up to £100,000. The banks say that they look at each case on an individual basis to decide on compensation, if any.
According to the story, the FOS warned people to be “more aware of the risks”. And that they should tell their friends about the scams.
Well yes. All good advice of course and as I said telephone fraud is a nasty crime and one that disproportionately affects the over 50s.
All of this raises some interesting questions about responsibility and compensation. How far are the bank's duty bound to offer compensation? Should they be responsible for the gullibility of their customers? The banks are not losing money through their own system failure, the customers are doing it themselves.
It’s hard to make a concrete case for compensation across the board as they would have to be proved negligent, and it’s unlikely that this is the case.
In more cruel terms, it could be said that successful telephone fraud is down to the stupidity of bank customers and asking for compensation is a bit like suing a locksmith after you left your backdoor open and got burgled. Not really their fault.
However, that’s harsh on victims – especially the elderly. Put it another way, and the victims of telephone fraud are simply being conned by experts. And even the best of us can fall victim to scammers at some point.
Perhaps the answer lies in better awareness of telephone fraud for bank customers, especially those more at risk. The banks after all, are victims too, the report says that they have also lost millions through telephone fraud. The money spent on this could well be offset by savings in losses and compensation.
The banks would benefit from better education of their customers, would gain kudos for looking to do something positive about the problem and save themselves some cash in the process. And most banks like that.Read Ashley Unitt's post to find out more about PCI compliance and what to look for in a vendor.