Banks biased against black fraud victims

The following is an op-ed I wrote in today’s Times. It appeared in their Thunderer column.

You’re less likely to be treated fairly by your bank if you’re elderly, poor, female or black. We’ve suspected this for years, and finally The Times has dug up the numbers to prove it.

Fraud victims who’re refused compensation often contact our security research group at Cambridge after they find we work on payment fraud. We call this stream of complaints our ‘fraud telescope’ as it gives us early warning of what the bad guys are up to. We’ve had more than 2,000 cases over 25 years.

In recent years we’ve started to realise what we weren’t seeing. The “dark matter” in the fraud universe is the missing victims: we don’t see that many middle-class white men. The victims who do come to us are disproportionately elderly, poor, female, or black. But crime surveys tell us that the middle classes and the young are more likely to be victims of fraud, so it’s hard to avoid the conclusion that banks are less generous to some of their customers.

We raised the issue of discrimination in 2011 with one of the banks and with the Commission for Racial Equality, but as no-one was keeping records, nothing could be proved, until today.

How can this discrimination happen? Well, UK rules give banks a lot of discretion to decide whether to refund a victim, and the first responders often don’t know the full story. If your HSBC card was compromised by a skimmer on a Tesco ATM, there’s no guarantee that Tesco will have told anyone (unlike in America, where the law forces Tesco to tell you). And the fraud pattern might be something entirely new. So bank staff end up making judgement calls like “Is this customer telling the truth?” and “How much is their business worth to us?” This in turn sets the stage for biases and prejudices to kick in, however subconsciously. Add management pressure to cut costs, sometimes even bonuses for cutting them, and here we are.

There are two lessons. First, banks need to train staff to be aware of unconscious bias (as universities do), and monitor their performance.

Second, the Financial Conduct Authority needs to protect all customers properly. It seems to be moving in the right direction; after the recent fraud against tens of thousands of Tesco Bank account holders, it said it expected fraud victims to be made good immediately. This has been the law in the USA since the 1980s and it must become a firm rule here too.

3 thoughts on “Banks biased against black fraud victims

  1. The banks don’t just discriminate against race they do so against the disabled myself being an example. Applied for a loan turned down and some of what they ‘implied’ when I appealed was astounding, quote ‘We’re aware that you intend to use the loan to settle some or all of your existing debt (held with other providers), however, as we’ve no control over the enforcement of that action, we’ve to allow for the possibility that this may not happen’ (a case for libel I think). So they think I’m not to be trusted when I say I want to consolidate debts!! Yet I asked them do they say this to all the people who apply for consolidation loans who like me have perfect credit ratings or is it just the disabled ones? And that was just one of the outrageous parts of the reply in their letter. The Financial Ombudsman Service are just as bad, like the banks they have no understanding of the disability act and how it relates to service. From the second I spoke to the FOS I knew they would side with the bank and yup, they did and their excuses were even lamer than the bank (when they turned me down for the loan), not only that the FOS ignored 75% of my complaint. So I intend to sue the Co-Op bank that’s assuming they have any money left as they are sinking faster than the Titanic. Just need to know how to do it and how to fund it, maybe I should get a loan – oh hang on I’m disabled so that blows that out of the water

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