Metro bank refuses to refund scammed customer | Money

Metro bank is one of the fastest-expanding new banks in Britain, aiming for 100 branches. But what if your account falls victim to fraud? One customer says he is outraged after Metro refused to refund £20,000 stolen from his account, despite accepting he did not authorise the payments.

Paul Graham*, a Kent-based businessman, lost £20,000 after fraudsters were able to go into the Brixton, south London branch of mobile phone company EE and take over his phone account, which they used to set up a series of new online payments, that subsequently emptied his Metro account.

Graham is just the latest person to suffer sim-swap fraud, but unlike other victims, Metro has refused to refund him. The fraud emerged just seven weeks after he opened his account at Metro and Graham says he had logged into his account only once.

Metro is one of the UK banks that continues to use text messages to verify its online customers, although critics say SMS is not secure.

The bank has refused to reimburse his losses, arguing he was grossly negligent in allowing his personal details to be harvested by the fraudsters.

The case has worrying implications for other Metro customers. It suggests that if they are similarly scammed and their mobile phone company’s security is also breached, they will not be refunded.

Guardian Money understands this is one of a number of fraud cases which Metro refuses to reimburse that are to be adjudicated by the Financial Ombudsman Service.

Like previous victims of this scam, the first Graham knew of a problem was when his mobile phone service stopped working.

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While it remains unclear how the fraudsters were able to gain his bank logon details, it is thought he was probably induced to sign up to a fake website which captured the details.

Despite acknowledging that his phone service was stolen and that he did not make the fraudulent transfers, Metro has told him that because so many of his security details were compromised, it believes he was negligent.

“I’ve used internet banking for over 15 years and have never been a victim of online fraud; however after only seven weeks of being a Metro customer I have fallen victim to online fraud. I wish I read reviews online before opening the account as I see this appears to be a bigger problem with Metro,” he says.

Metro told Money: “Because so many security details were compromised, we are unable to refund the amount lost as a result of the fraudulent activity. Security details are unique to each customer and are not accessible by anyone at Metro bank.”

Financial fraud expert Richard Emery, who is advising Graham, says this is the latest case of a bank wrongly refusing a refund.

“The bank acknowledged that his details had ‘become unknowingly and inadvertently compromised online’. In my view his actions do not constitute gross negligence as set out in either payment services regulations or the Financial Conduct Authority guidance,” he says.

EE says: “We sincerely apologise, as unfortunately in this case our policies were not followed. We are taking the appropriate disciplinary action internally, and we will continue to review and introduce additional technical measures and policies to better protect against fraudulent sim swaps.”

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“This type of fraud is successful only with the few banks who still rely on SMS authentication for financial transfers, and we believe that these banks should follow the lead of others globally in moving to more secure mobile apps or devices for authorising transactions,” it says.

*Paul Graham is not his real name