On April 14, United Kingdom bank TSB announced the launch of what it termed its “Fraud Refund Guarantee.” The Guarantee – which TSB characterized as a first in United Kingdom banking — “means that if you’re clearly an innocent victim of fraud on your TSB account, we will refund the money you lost from your account.”
TSB explained the scope of its Guarantee as follows:
All too often people who have money taken out of their account by fraudsters have to fight to get their money back. Even though this is the last thing you feel like doing if you’re the victim of crime.
Our Fraud Refund Guarantee means that you will get a refund even if you make an honest mistake. Whether you accidentally click on something you shouldn’t, or you share some sensitive information without thinking. As long as you’re an innocent victim, we’ll refund you.
TSB also stated two circumstances in which it would not refund money to a customer: (1) if a customer is “involved in committing the fraud”; and (2) if a customer “has been repeatedly affected by fraud, because they didn’t follow the advice we gave them to keep their account safe.”
TSB’s announcement stems directly from the catastrophic April 2018 information-technology migration at TSB that resulted in some TSB customers going weeks without banking services, 200,000 customer complaints, a loss of 80,000 customers, and some 1,300 customers being defrauded. Then-Chief Executive Officer of TSB Paul Pester stated that the levels of fraudulent attacks had increased 70 times, as scammers conducted phishing calls, emails, and texts “purporting to be TSB and asking them to verify their bank details.” In addition, United Kingdom Financial Conduct Authority (FSA) head Andrew Bailey reported that there had been approximately 10,600 fraudulent attempts relating to TSB’s IT catastrophe, and informed the United Kingdom Parliament that the FSA, jointly with the United Kingdom Prudential Regulation Authority, would investigate the TSB IT migration.
Note: Regardless of the circumstances prompting its announcement of the Fraud Refund Guarantee, TSB deserves credit for taking the lead in adopting a progressive approach to refunding its customers who are victimized by fraud. While banks should be vigorously competitive in the products and services they offer, the concept that “fraud is not a competitive issue” should remain a vital component of any bank’s culture of compliance – particularly as cybercriminals have become increasingly sophisticated in their exploits and techniques and target banks and bank customers for massive frauds. Adoption of a similar fraud-guarantee policy by other United Kingdom banks would not only serve to present a united front on fraud remediation, but also help to alleviate British bank customers’ widespread mistrust in their banks.