Two of the UK’s most high-profile challenger banks, which have received billions of dollars in funding, have seen a spike in the number of fraud complaints to the UK’s complaints service, new figures show.
The UK’s Financial Ombudsman Service (FOS) received 2,888 fraud complaints about Revolut in the six months to June end this year, a 31 per cent increase compared to the 2,208 complaints it received in the six months previous.
The complaints service received 1,864 fraud complaints about Monzo in the six months to June end this year, a 44 per cent increase compared to the 1,291 complaints it received in the six months previous, according to figures obtained through Freedom of Information (FoI).
The FOS received 378 complaints about a third UK challenger bank, Starling Bank, in the six months to June end this year, a nine per cent compared to the 348 complaints in the previous six months.
The fraud and scams data obtained by Tech.eu runs across push payment, chip and PIN fraud and disputed card transactions.
Revolut has over 10m customers in the UK, Monzo has more than 11m customers in the UK and Starling has over 4m customers in the UK.
Combating fraud is becoming an increasingly hot-button issue for challenger banks, as they look to grow their customer bases while maintaining rigorous measures to combat fraud.
The BBC revealed in October this year that Revolut, Europe’s most valuable privately held startup. was named in more complaints, nearly 10,000, than any other major UK bank, according to figures for the UK’s national reporting centre for fraud and cyber-crime Action Fraud.
Banks are required by law to conduct rigorous checks on new customers to prevent fraud and money laundering,
Customers who can’t resolve a complaint with their bank, can take their grievance to the FOS.
Any customer can raise a complaint with the FOS and the data obtained by Tech.eu does not show the number of upheld complaints.
Victims of scams and fraud typically complain to the FOS when they have been declined a reimbursement by their bank.
The FOS has the powers to force banks to reimburse customers if they judge that they have not safeguarded customer funds.
It is also likely that some fraud victims are unaware of the FOS and its services.
Revolut and other banks have criticised social media companies for being the biggest source of bank scams, saying Meta, owner of Facebook, Instagram and WhatsApp, is a “hotbed” for scams.
Revolut recently said it might refuse or delay certain payments, as it looks to crack down on fraud, according to UKTN.
Changes to its terms of services mean that cases of scams and fraud are now sufficient conditions for preventing both outbound and inbound payments to current accounts.
Revolut said it had invested “heavily” in its Financial Crime prevention team.
Revolut said:
“Revolut takes fraud and the industry-wide risk of customers being coerced by organised criminals, incredibly seriously.
“In 2023, we cut the number of fraudulent transactions in the UK through Revolut by over 20 per cent, in addition to preventing over £475m of potential fraud losses to our customers globally. This, despite new customers joining Revolut every month.”
Monzo said it invested heavily to stop fraud.
Monzo said:
“Fraud is an industry-wide problem, with people nationwide losing £1.17 billion to fraudsters last year alone.
“At Monzo our priority is to stop customers from falling victim to scammers in the first place.
“We continue to invest heavily in protecting our customers, launching industry-first tools and leveraging our unique position as both a fully regulated bank and leading technology business to stop fraudsters in their tracks.”
Starling was unavailable for comment.