Banks have been told they must do more to ‘break the spell’ of romance scams, after an investigation uncovered one victim who had made 403 payments to a fraudster in one year.
A probe by the financial watchdog uncovered cases where financial firms missed opportunities to prevent the scams, which cost victims £106million last year.
On average, victims lost £11,222 each to these scams, and in one instance a victim lost more than £428,000, the Financial Conduct Authority said.
Another victim made 403 payments to a fraudster over the course of a single year, resulting in losses of over £72,000.
The bank in question later acknowledged it had not identified the sustained, out-of-character activity.
Another victim was allowed to make a payment after telling bank staff they intended to send cryptocurrency payments to Iraq, claiming it was the only method accepted by their ‘partner’ in the military.
A romance scam is where victims are deceived into sending money to fraudsters who fabricate false romantic relationships or friendships.
Do more: The Financial watchdog says banks must ‘break the spell’ of romance scams which cost victims £106million last year
Romance fraud is a rapidly growing financial crime, with cases rising by 9 per cent last year.
Often fraudsters pretend to work on an oil rig or in the army when trying to convince their victims into sending them money.
Scammers gain the trust of a victim by posing as a love interest, communicating with their victims daily to build trust and credibility before asking them to transfer a large sum of money.
The vast majority of cases start online, according to the FCA, particularly through social media and dating websites, suggesting platforms have a critical role to play in preventing fraud and reducing harm.
What can banks do better?
The FCA has set out measures banks and payment firms can take to protect their customers from romance scams.
These include better detection and monitoring systems, staff training, early identification of signs of vulnerability, and compassionate aftercare.
The FCA found multiple instances of firms missing opportunities to identify seemingly suspicious transactions. This indicated that banks could change their monitoring systems to make them more effective.
Intervention and prevention of romance scams are made difficult for banks because victims may be ‘under the spell’ of the fraudster and reluctant to accept they are being defrauded.
In 42 per cent of the cases the FCA reviewed, victims did not disclose the true reason for making a payment when asked.
As a result, the FCA said banks must ensure their staff are trained to spot red flags and critically probe customer explanations. This was not consistent across all firms in the FCA’s review.
Steve Smart, executive director of enforcement and market oversight at the FCA, says: ‘Romance fraud is a vicious crime. All too often it is the vulnerable that fall victim.
‘We recognise the challenge banks and payment firms have in combating this complex crime and this review aims to help them stay one step ahead of the criminals.’
Banks have stepped up efforts in recent years to raise awareness of scams among their customers.
Lloyds Bank shares a real-life transcript between a Lloyds employee and a customer who was attempting to transfer £10,000 to someone he had been talking to online, with details omitted to protect the identity of the customer.
Liz Ziegler, fraud prevention director at Lloyds said: ‘Our specialist fraud prevention teams work hard to protect and safeguard customers from fraud, and romance scams are some of the cruellest cases they deal with.
‘Taking advantage of people who are looking for love and companionship, fraudsters play with victims’ emotions when they could be at their most vulnerable.’
Elsewhere, Santander has a dedicated ‘break the spell’ team working on preventing customers falling for romance scams, which it says stopped customers from losing £3.5million in the first six months of 2024.
Michelle Pilsworth, head of fraud and complaints at Santander said: ‘At Santander, we have a dedicated “break the spell” team, a specialist fraud prevention unit that works with customers who are being manipulated by scammers, particularly in cases of romance scams.
‘But more needs to be done earlier in the process, and it’s important that everyone in the industry, regulators, social media and dating platforms work together, to stop these criminals at the source.’
How do scammers convince people to send money?
Once they have established a relationship with their victims, scammers will often claim either they or a family member need urgent medical treatment, often due to something like a car accident.
A scammer might also request money for flights or travel expenses to ‘visit’ the victim. Or they might ask for help with rent, food, or other daily expenses.
Other reasons they might use for needing money include legal fees, making tax or customs payments or business problems.
Scammers will often ask victims to send money to them via bank transfer, but other tactics include asking the victim to purchase online gift cards and send them instead.
These are easy for the scammer to sell on and profit from, and also less traceable so it is harder for the victim’s bank to claw back the cash.
An FCA spokesman said: ‘Alarm bells should ring if someone you’ve only met online asks for money or suggests investments. Never send money, or crypto assets or vouchers, no matter how sad their story.
‘Get a second opinion from a family member or friend if the other person’s behaviour seems suspicious and you are being asked to make financial commitments you aren’t comfortable with.’
If you think you’ve fallen victim to a romance scam, report it to Action Fraud or Police Scotland if you live there. Speak to your bank as you may be able to get a refund of money you’ve sent – up to £85,000 – and it can help to prevent further losses.
> Have you, a family member or a friend fallen victim to a romance scam? Contact us in confidence: editor@thisismoney.co.uk
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