People searching for love in the UK lost £106 million to romance fraudsters last year, according to the financial regulator, as it sets out how banks – and individuals – should act to stop sweet-talking scammers.
Scammers target Brits over everything from fine wine and Winter Fuel Payments to motor finance compensation. They have also been known to pretend to be the regulator.
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Steve Smart, executive director of enforcement and market oversight at the FCA, said: “Romance fraud is a vicious crime. All too often, it is the vulnerable who fall victim. The impact – financially and personally – can be devastating.”
Examples of romance fraud
Some banks are better than others at stopping romance fraud, the FCA found in its investigation.
One case in the FCA’s review involved a victim losing more than £428,000. Another saw a customer telling bank staff they intended to send cryptocurrency payments to Iraq, claiming it was the only method accepted by their ‘partner’ in the military. Despite the unusual reason for the payment, it wasn’t stopped by the bank.
In another case, over the course of a year, the victim made 403 payments to a fraudster – more than one payment every day – leading them to have £72,000 stolen from them. A subsequent investigation by the victim’s financial firm found it had not identified the repeated, out-of-character activity.
There were also positive examples in the FCA’s review of banks and payment firms going above and beyond to help customers.
One firm made 11 calls over a six-week period to support a victim, “demonstrating a commitment to breaking the fraudster’s hold and restoring customer confidence”, the FCA said.
Another financial firm offered help and care to a victim who had recently divorced and was supporting a child undergoing cancer treatment. They went on to closely monitor the victim’s account.
“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,” said Smart.
These include better detection and monitoring systems, staff training, early identification of signs of vulnerability, and compassionate aftercare.
What the FCA knows about romance fraud
The FCA’s review into romance fraud uncovered a number of findings about how difficult it is to stop this type of scam – but also how some financial firms are doing better than others to protect customers.
The intervention and prevention of romance fraud is difficult for financial firms because victims may be ‘under the spell’ of the fraudster and reluctant to accept they are being defrauded, the FCA’s review found.
For example, in nearly half (42%) of the cases the FCA reviewed, victims did not disclose the true reason for making a payment when asked.
The FCA did find some good practice by financial institutions. But there were also multiple instances of firms missing opportunities to identify seemingly suspicious transactions, it said, and called for more monitoring.
A key area of improvement is for firms to ensure their staff are trained to spot red flags and critically probe customer explanations, the FCA said. “This was not consistent across all firms,” it found.
Many firms are providing a high-level of support to customers, occasionally exceeding the FCA’s expectations, “through compassionate and tailored engagement”, although this wasn't consistent across all firms, the regulator’s review found.
Romance fraud red flags
The FCA has said financial firms need to do more to protect customers. But the regulator also wants savers and investors to be more critical of love interests they meet online who end up asking for money.
The FCA’s list of romance fraud red flags include:
- 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.
- Look beyond the online profile. If someone asks you for lots of personal information, yet is unable to meet in person, then that could be a red flag. And use image checkers to see if their pictures can be found elsewhere.
- 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, 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.
