‘TRUST, BUT VERIFY’
by Douglas Melville, Principal Ombudsman & Chief Executive, Channel Islands Financial Ombudsman (CIFO)
In our line of work, we often remark that ‘you just cannot read fiction as interesting as some of the stories that come to us’.
n the five years since the Channel Islands Financial Ombudsman first commenced operation, the several thousand complaints from financial consumers against their financial services providers have certainly illustrated many themes worthy of sharing with the public. None are perhaps more heart-breaking than those of our fellow consumers falling prey to fraud.
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In 2020 many of us changed our behaviours to compensate for being isolated at home to keep safe from Covid-19. More of us embraced information technology to keep in touch with family and friends. Some have embraced online banking even more or for the first time as transactions can no longer be easily made in their local bank branch. Many small businesses continued to operate with their teams working from home, yet still connected. The new technology skills we have learned have served us well, but this has also left us more exposed to potential fraud, especially the more vulnerable amongst us and those less familiar with online payments and the associated risks. Text messages and email have become increasingly useful tools for criminals trying to separate us from our money.
Perhaps the most challenging type of fraud CIFO has dealt with in recent times is authorised push payment fraud, or APP fraud. This is where the customer is tricked into authorising the transfer of funds from their account to a criminal’s account at another bank, often in the UK; an account usually opened by the criminals using a fake identity. The criminal then empties and closes their own account at the other end of the transaction and the money sent has gone.
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For those that might see fraud as a lower concern “white- collar crime”, nothing can be further from the truth. Research conducted by the United Nations World Health Organisation, an agency often in the news this past year, confirmed something that those of us who have seen people hurt by such fraud have known all along, and that is fraud kills. Some in their later years who suffer a catastrophic financial loss due to fraud show a significantly higher risk of early death. For those who survive the trauma of financial fraud, the impact on their quality of life and mental health can be extreme. Many feel great shame at having been tricked. Some feel so ashamed they do not report the crime or even share their pain with family and friends. We must speak out and fight back through awareness.
The issues we see in complaints brought to us are whether the security processes and procedures of the financial services provider
contributed to the fraud. Yet the challenge in resolving such disputes is that, in most cases, both the consumer and the bank are the innocent victims of criminals. CIFO looks to determine what a fair and reasonable outcome would be in such cases, but the best outcome is clearly to prevent fraud in the first place. We can all help make that happen.
CIFO has published a series of case studies which illustrate APP fraud and other types of payment fraud that help build public awareness about the threat. These can be found on CIFO’s website at
www.ci-fo.org. You can search under the keyword “Fraud”.
In the Channel Islands there are several agencies, including
PROTECTING OURSELVES FROM PAYMENT FRAUD IN THIS NEW WORLD
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