Jacob Eade from Bethersden, Kent, and Mary Gough from Hordle, Hampshire, both sought to expand their homes.

Using platforms like Mybuilder and Checkatrade, they sourced contractors and were approached by the same company. With remarkably low quotes and a professional website claiming 30 years of experience, the firm seemed credible.

Both Eade, 44, and Gough, 66, conducted similar background checks, including scrutinizing the company’s registration on Companies House. The representatives sounded reassuring over the phone and provided documents showcasing previous projects like extensions and loft conversions.

After transferring significant deposits, Eade was satisfied with the initial foundation work completed, while a surveyor visited Gough to create plans for her project. However, in August, the company abruptly ceased communication, with all phone calls going unanswered and emails bouncing back. The firm’s website became inactive.

Concerned, the victims reported the situation to the police and requested refunds from NatWest, their shared bank. Banks can issue refunds for scam victims under a voluntary protocol, provided the victim took adequate steps to verify the recipient’s credentials.

While NatWest acknowledged Eade as a scam victim and refunded him a total of £25,800, Gough’s case was treated differently. NatWest labeled her situation a “civil matter” and suggested she might have to pursue court action to reclaim her £9,300.

The Inconsistent Refund Experience

Their disparate experiences illustrate the complex landscape of fraud refunds impacting victims of authorized push payment (APP) fraud, where individuals voluntarily transfer money to con artists. Reports indicate that banks often handle cases inconsistently, despite the victims having taken necessary precautions.

These scams frequently involve imposters posing as bank or police representatives to convince victims to transfer funds into a supposedly “safe” account, from which the money is swiftly redirected to accounts across the globe.

Scammers are increasingly masquerading as legitimate businesses or investment firms, leveraging official registers like Companies House to gain an illusion of authenticity. These registrations may, however, be used by banks to dismiss refund requests, claiming that the company was legitimate and simply failed.

The extended duration of police investigations into intricate fraud schemes often leaves banks with uncertainties about whether a crime has been committed, compelling them to base refund decisions on the extent of due diligence performed by the victim.

According to UK Finance data, APP fraud cases surged from 154,600 in 2020 to 232,429 in the past year, with associated losses escalating from £421 million to £460 million.

Effective October 7, refunds for APP scams, wherein victims can demonstrate a lack of negligence, will be limited to £85,000 under revised regulations from the Payments Services Regulator (PSR), replacing the previously unlimited voluntary refund policy most banks adhered to. Critics argue this change could relieve banks of responsibility.

Following inquiries by The Sunday Times to NatWest, Gough received a full refund. The building firm remains unnamed as investigations continue.

The Builder Scam

Over 100 complaints have been lodged with Action Fraud, alleging that individuals transferred more than £1 million combined to the same building contractor linked to Eade and Gough from February to July, with around 42% of those not receiving refunds.

The Sunday Times has spoken to multiple customers who believe they fell victim to the same scam. They were assured by the firm’s references to accredited trade associations like the Consumer Protection Association and the Association of Master Tradesmen, as well as its registration with the FCA.

The banks’ responses to these claims have varied significantly: while some individuals have received full refunds, others have been left with nothing or only partial reimbursements.

The company was established in November 2020 and primarily utilized NatWest, HSBC, or ClearBank to process payments.

Anon Jones, 43, from Market Harborough, paid a £13,500 deposit for home extension work in May from his Lloyds account to the firm’s ClearBank account. After the builder went silent, he reported the incident and, following an extended call with Lloyds’s fraud division, received a full refund the same day.

Eunice Ola, 54, a mental health nurse from Birmingham, transferred £12,300 to the company in April for a kitchen extension. Lloyds has yet to provide her with a refund, citing an ongoing investigation.

Mark Forrest, 64, another Lloyds customer, sent £10,000 as a deposit, but work was never initiated. Although Lloyds initially rejected his claim, they eventually acknowledged the scam but only refunded half of his loss, citing lack of care in verifying the transaction.

Following The Sunday Times’ inquiry, Forrest received a full refund. Lloyds stated they treat such cases as scams from the outset, closely assessing each claim based on payment regulations.

A 44-year-old HSBC customer from Derby reported sending £12,500 to the building firm but experienced similar pushback from HSBC until they ultimately agreed to a full refund with additional compensation after appealing against their initial decision.

Conversely, Lydia Rai, 52, another HSBC customer, has not received compensation for the £8,100 she sent for a bathroom extension, as her bank alleges insufficient due diligence on her part.

HSBC indicated that each case is evaluated on an individual basis, leading to varied decisions even for multiple reports involving the same fraud.

The Consumer Protection Association has been contacted for further comment, while the Association of Master Tradesmen terminated the scam contractor’s membership promptly, stating they are working to assist affected customers.

Mybuilder emphasized that tradespeople must pass a rigorous assessment process and further checks. The company acted swiftly to deactivate the offending account once a complaint surfaced.

Checkatrade reiterated that this scam was a sophisticated scheme affecting numerous stakeholders.

New Regulations on Refunds

As of October 7, banks must refund victims of scams up to £85,000 if they can prove non-negligence, splitting the financial responsibility with the receiving bank.

However, some victims, particularly those involved in investment or pension scams, may still incur losses exceeding this cap.

Nevertheless, victims retain the option to file a claim with the Financial Ombudsman Service, potentially recovering up to an additional £430,000, depending on the investigation outcomes concerning their bank’s protective measures.

The PSR remarked on the distinction between APP scams and civil disputes, urging thorough investigations into each claim.

NatWest reported that they’ve compensated all affected customers in the last month, ensuring their protocols identify and manage suspicious transactions. The implicated company has since lost its banking privileges with NatWest.

ClearBank clarified that the builder was a client of its partner Tide and emphasized compliance with all relevant legal obligations.

Tips for Consumer Protection

To bolster your defense against scams, ensure that it is difficult for banks to challenge your due diligence. Always verify the legitimacy of businesses listed on official register databases.

If engaging a builder, gather references and observe their past projects whenever feasible.

Should you become a victim of a scam, report it immediately to Action Fraud and inform your bank as soon as possible.