Banks and payment firms are urged to enhance their monitoring systems and staff training to better protect customers from romance scams, which resulted in losses of £108 million for Brits last year, as reported by the Financial Conduct Authority (FCA).
Romance fraud is an increasingly prevalent crime, with incidents rising by 9% last year. Victims are manipulated into sending money to fraudsters who create fabricated romantic relationships or friendships, often through social media and dating platforms.
One case reviewed by the FCA involved a victim losing over £428,000. In another instance, a victim made 403 payments to a fraudster over a year, totaling more than £72,000 in losses. The FCA’s investigation noted that the firm failed to identify this unusual and sustained activity.
The regulator explains that intervention and prevention are challenging for firms since victims may be “under the spell” of the fraudster and hesitant to acknowledge they are being scammed. In nearly half of the cases examined by the FCA, victims did not reveal the actual reason for their payments when questioned.
While companies are taking steps to address these issues, the FCA found numerous instances of missed opportunities for identifying suspicious transactions. “This indicates that firms could adjust their monitoring systems for greater effectiveness,” the FCA stated. Additionally, some providers must improve staff training to recognize red flags and inquire further into customer explanations.
Steve Smart, executive director of enforcement and market oversight at the FCA, remarked, “Romance fraud is a vicious crime. Victims are often vulnerable, and the financial and personal impact can be devastating. We understand the challenges faced by banks and payment firms in combating this complex crime, and this review aims to assist them in staying ahead of the criminals.”