The telephone fraudsters that just keep on taking

As more cases emerge of readers who have been conned out of their life saving, we look at how the banks are responding. More victims of telephone fraudsters, who persuade the unwary to hand over their life savings, have come forward – one woman lost more than £100,000. It has also emerged that, in some rare cases, the banks have been refunding the money.


Last month Guardian Money highlighted how thousands of mostly older people had fallen victim to the so-called "courier fraud", which starts with a phone call out of blue. Callers pretend to be phoning from the bank investigating a fraud – in some cases they say they are police officers – and have been successful in conning people out of big sums.


But the conmen have simply kept the phone line open (see below for how this works) and wait for the bank call. The two victims we featured in June had lost £23,000 and £7,000. Their banks, Barclays and NatWest, refused to help on the basis that they had personally asked to withdraw their money, and the banks had simply complied.


Guardian Money has since been contacted by another victim who lost £68,000, but in this case has been refunded by Barclays. She was called by someone claiming to be from Tesco Finance, saying that he had reason to believe her Tesco credit card had been fraudulently used online, and that her bank account could also have been compromised.


As this had happened to her husband about two years earlier, she took it more seriously than she might have. She was invited to call the number on the back of her Santander bank card and got straight through to what she thought was its fraud department.


"I did not give any bank account details and he was extremely convincing, having answers for all my questions about security. I then transferred my life savings of £68,000 into what I thought were two 'Santander secure' accounts. I later discovered these were two Barclays accounts at a branch in east London."


It was only when it emerged that Tesco had not called that she realised what had happened. But the genuine Santander fraud department made it clear that it was not responsible as she had made the transfer. "I was devastated and in shock; like many other victims, this money was all I had saved, including my pension lump sum. They took not just the money but my future hopes, dreams and the safety net for a time when I would possibly need extra funds."


Three days later she was told the Barclays accounts were closed and all the money gone. The case was referred to the Metropolitan Police serious fraud department and she contacted the Financial Ombudsman Service for a judgment on the bank's decision. Six months later it notified her that Barclays would repay the £68,000 in a "full and final settlement of my complaint against them as a gesture of goodwill".


She adds: "I was delighted. I have been extremely fortunate, but most do not get the same result. "You cannot believe what an impact this can have. I felt incredibly stupid and lost all confidence. I stopped going out at one point."


Barclays says the money was refunded because the account to which it was moved had already been flagged up as suspicious. It explains: "Where we are alerted to suspicious activity, or it is picked up by our transaction profiling, we will investigate and if we are satisfied that the accounts are being used to launder the proceeds of crime we act as quickly as possible to close the accounts. Customers who transferred funds into the account after a fraud has been detected would receive a refund."


He said he cited the case of Barclays Bank plc v Quincecare Ltd, 1992, and quoted this from the judgment: "Given that the bank owes a legal duty to exercise reasonable care in and about executing a customer's order to transfer money … If the bank executes the order knowing it to be dishonestly given, shutting its eyes to the obvious fact of the dishonesty, or acting recklessly in failing to make such inquiries as an honest and reasonable man would make, no problem arises: the bank will plainly be liable."


HSBC, without admitting liability, had replaced the £5,000 in his wife's account within a few days, he wrote. Money asked barrister Richard Colbey, of Lamb Chambers, to see whether this argument could work for other fraud victims, and he said not. "The citation he gives is one of trite and obvious law, but does not help with your cases where the bank has not closed its eyes to something obviously wrong."


Tackling the networks


Since this scam came to light, telecoms providers have come under pressure to quickly terminate calls when the recipient puts down the phone. Currently, if you phone some two-thirds of BT numbers you can remain on the line for several minutes, even if the person taking the call has put down the handset.


This has allows the scam to succeed. The victim hears a fake dialling tone, and calls what they think is their bank. Ofcom says its has been working with the industry to tackle the problem. The telecoms regulator says TalkTalk reduced the disconnect time to two seconds on its network in September 2013. Sky did the same in June this year.


BT has so far reduced the times to a maximum of 10 seconds for around 6 million customers on its network representing a third of BT's local exchanges.


Ofcom expects the remaining exchanges, which are more complicated to change, to take up to year to upgrade. Virgin Media hopes to cut the time to two seconds for 50% of customers by the end of September. The other half could take a year or more.


A spokesperson says: "Ofcom remains committed to working closely with the police, and landline and mobile providers, to ensure that necessary changes to telephone networks and systems are made as quickly as possible. We have been absolutely clear in our dealings with providers that they have a very important role in protecting their customers from fraudulent activity and that this work must be prioritised."


Keep it personal


Don't fall for what looks like a growing scam – a call from someone pretending to be from BT asking you why your latest bill hasn't been paid.


A Guardian reader contacted us after she was phoned at home on 3 July. Coincidentally, she had paid her BT bill by cheque just 10 days or so before, so it all "sounded extremely plausible". The caller asked for her date of birth "for security purposes". "I reminded him that he had phoned me, but he insisted he still needed it. He encouraged me to pay the bill there and then by credit card. He asked how much the cheque had been for. I told him, but then it struck me that he had not given me any information that confirmed that he was from BT. I said I was going to phone back."


She called BT to confirm that her account was clear, and at that point realised the scammer had been trying to con her card details out of her – including the three digit number on the back – and her postcode. Our reader didn't fall for it. No one should ever hand over personal information to anyone over the phone – whoever they say they are.