Revolut Fraud: Negligence exposes users to APP fraud risks

Revolut’s Weakness Against APP Fraud

In today’s digital world, fraud and cyber threats have become alarmingly prevalent. Scammers exploit vulnerabilities in e-money platforms and banking systems through tactics like phone impersonation scams, purchase scams, and even fraudulent transactions disguised as legitimate account activity.

As digital financial platforms like Revolut, Starling, and Wise claim to make managing your money easier than ever, it appears that they also expose users to new risks. One of the most alarming threats is Authorised Push Payment (APP) fraud, where scammers pose as representatives from your ‘e-money platform’ (EMP), tricking victims into transferring funds directly to their accounts.

What is APP Fraud in detail?

Authorised Push Payment (APP) Fraud is a type of scam where criminals deceive individuals into willingly transferring money from their own bank account to an account controlled by the fraudster. Unlike other types of fraud, in APP fraud, the victim actively authorises the payment, making it particularly challenging to recover lost funds.

As reports of fraud rise, including APP fraud, card fraud and bank transfer scams, victims are often left frustrated by the lack of support from financial institutions. Identifying a potential fraud case and acting swiftly is critical to keeping your transactions or account updates safe.

Revolut’s Handling of Fraudulent Transactions

We were recently instructed by a client who fell victim to a scam on Revolut. Despite clear security lapses and failures in fraud recognition protocols, Revolut refused to reimburse any of the stolen money and denied any responsibility for the incident.

At the core of the fraud, Revolut’s systems failed to identify that the fraudulent activity on our client’s account was entirely at odds with the purpose of the account, as registered at account opening – to be a long-term holdings account that would rarely, if ever, be accessed. Because voluminous transactions were allowed to process, large amounts were rapidly lost by our client.

At Twelve Tabulae, we understand the devastating impact of falling victim to scam activity, like Revolut Fraud, and the importance of holding platforms accountable for failing to prevent these attacks. Whether it’s sophisticated scammers or gaps in fraud detection, we specialise in reclaiming stolen funds and safeguarding your financial rights.

Regulatory Obligations and Failures

Thereafter, the ‘investigation’ conducted by Revolut was cursory and without foundation; our client received a letter which bluntly informed him that his money was lost and Revolut would not be issuing any refund.

Operating under the purview of Financial Conduct Authority (FCA), Revolut must adhere to the Electronic Money Regulations 2011, which require financial firms to conduct “thorough and transparent investigations” into fraud claims and maintain communications with customers.

The FCA’s Principles for Businesses (PRIN 2.1) further stress the obligation to act with care and diligence.

Revolut’s Non-Compliance with FCA Standards

Revolut’s handling of our client’s case clearly did not meet these requirements. Our client was made to feel as though the onus was on him to prove that Revolut had failed to protect the account; understandable given he was not being informed of his rights as a banking customer nor did Revolut meet its obligations as an EMP regulated by the FCA (itself a breach of FCA transparency principles).

The FCA’s Dispute Resolution Rules require customer complaints to be resolved “fairly, promptly, and efficiently.”

During the revolut fraud case, our client at times faced silence, dismissive correspondence and sheer neglect, which is obviously far below the expected standard and a clear breach of Revolut’s FCA obligations.

The Risks of Hybrid Banking Structures

While traditional banks must also adhere to the protocols of the Financial Services Compensation Scheme (FSCS), enforcing stringent fraud safeguards and security measures, Revolut operates outside of this regulatory framework because of their hybrid banking structure.

This lack of regulation allows Revolut to circumvent thorough customer verification and customer focussed transaction monitoring, ultimately increasing the risk of scams and financial losses for its users.

Unlike traditional banks, which publicly disclose customer losses due to fraud, Revolut opt to stay silent on the matter, leaving customers in the dark about the true scale of the issue and therefore the potential threats posed to their money.

Challenges with AI-Driven Anti-Fraud Mechanisms

The recent damning BBC Panorama investigation, “Britain’s Newest Bank: How Safe Is Your Money?” exposed Revolut’s troubling track record in its ability to safeguard users against APP fraud.

This issue is far from isolated, it impacts thousands of customers who have voiced their frustrations over dismissive responses and inadequate investigations after falling victim to scams. Many users have reported suspicious transactions, including multiple payments to unfamiliar accounts that drain their funds without triggering any alerts.

The critical problem with AI governed anti-fraud mechanisms employed by EMPs such as Revolut is that they are difficult to control and audit – it would be akin to mapping the thought processes of a person through questionnaires. Traditional banks offset this with human anti-fraud systems which run alongside AI.

Legal Recourse: Suing for Negligence

Industry standards at traditional banks are such that AI is a tool for rapid identification of fraud threats, not the full range of anti-fraud measures. Despite much publicised assurances of security, Revolut’s failure to protect users on such fundamental levels raises serious questions about their compliance with regulatory obligations and its approach towards its duty of care towards customers.

However, a powerful and universal method of recovery is available, albeit one that requires careful professional legal application – suing for negligence. Revolut failed to exercise reasonable care towards our client, which is the care expected of Revolut as an FCA regulated EMP holding and handling the money of our client.

Any customer in similar circumstances to our client would certainly have a strong prima facie claim against Revolut for the losses sustained by the fraud and even the resultant costs in reclaiming the loss (legal costs). A customer would only need to prove on the balance of probabilities that Revolut owed them a duty of care and breached it by failing to exercise reasonable care as a bank.

This route of recovery would encompass any evidence of Revolut’s regulatory failings to support any claim of negligence in a financial settlement or trial.

New regulations introduced this month significantly enhances protections for APP fraud victims, now entitling victims—including individuals, charities and small businesses—to recover up to £85,000 for fraud-related losses. This follows over 232,000 reported cases of APP fraud in 2023, resulting in over £459 million in losses.

Act Against Fraud with Twelve Tabulae

Fraudulent transactions, whether linked to impersonation scams or suspicious payments, can leave victims feeling helpless. Criminals prey on vulnerabilities, using stolen account or card details to execute investment scams or purchase scams that drain hard-earned money. Yet, many financial institutions neglect their responsibility to reimburse affected customers, even when clear evidence of scam activity exists.

As fraudsters evolve, so do legal protections for consumers. Here at Twelve Tabulae, we are at the forefront of enforcing customer rights under law so that defrauded sums may be reclaimed in addition to resultant damages caused, including any physiological impact from the severe stresses of having money stolen so ruthlessly.

If you’ve experienced scam-related losses, it’s essential to act decisively. Twelve Tabulae, specialists in criminal law, offer expert guidance to review your case, pursue reimbursement, and challenge negligent financial platforms. Don’t let the actions of a sophisticated scammer define your financial future—let us assist you in taking back control.

Our team of experts have a deep understanding of the laws and regulations governing e-money platforms. We will ensure your legal rights are protected and work diligently to push back against platforms avoiding responsibility.

Do not allow fraud to go unchallenged. Contact Twelve Tabulae today to discuss your case and take the first step toward reclaiming your funds.

Simon Caltagirone
CEO and Senior Solicitor