Fraudster used Revolut customer’s card for £62,000 spending SPREE at Selfridges; theft not reimbursed

Revolut bank is reportedly fanning new, negative PR flames from banking fraud. We report…

February 26, 2023
Fraudster used Revolut customer's card for £62,000 spending SPREE at Selfridges; theft not reimbursed
Matt Crabtree

Written By

Matt Crabtree

 
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A new fraud scandal occurred in 2023 with the Revolut bank. The Financial Conduct Authority has been criticised by Revolut's co-founder and CEO Nikolay Storonsky for taking too long to grant the company a banking licence in the United Kingdom, in 2018 (pictured above).

  • The company lost £62,000 after falling for a scammer's ploy to get the company's personal information.
  • On a Tuesday in January, Thomas Crooks logged into the Revolut account for his small company and found a very unpleasant surprise waiting for him.
  • The imposter used his stolen credit card information to make a purchase of £62,000 at Cartier at Selfridges.
  • The online payment platform, which is not a regulated bank in the UK, declined a second payment of the same amount, drawing negative digital PR from British news outlets, particularly during the inflationary period the UK is seeing, putting it further behind more popular challenger banks like (Monzo Bank review), which is reportedly currently planning for an IPO in 2024-25.

Customer contact attempts reportedly ignored

While Monzo side-steps to speak with the reporter about very positive news of an IPO, which would make the company's stock very desirable among British fintech investors. Mr. and Mrs. Crooks panicked and made many attempts to reach out to Revolut, who reportedly ignored this bad press.

The couple reflected on the day before and recalled receiving a phone call in which a guy, apparently phoning from the Revolut number, urged them to re-authenticate their Apple Pay.

Since the fraudster knew Mr. Crooks's personal information (name, address, and card number), they had given him the passcode they'd been emailed, believing that he was calling from their bank.

It gave the con artist all the information he needed to save the card to his phone.

Here's how to keep your hard-earned cash where you want it: in YOUR bank account

James Bore, a cyber security specialist, outlined the straightforward guidelines he uses to foil fraudsters: 

  • A modest portion of your savings should be held in Revolut or a comparable platform. James suggests using the app like a cash wallet to prevent catastrophic losses.
  • To prevent information breaches, use one-time use cards for subscription and online purchases.
  • With Revolut, customers may create temporary cards with unique transaction numbers. It's a great place to start.
  • Do not assume that a bank caller from your phone's caller ID is legitimate.
  • Ask for a reference number if you get a suspicious call, then hang up and contact the bank using the number on your card or the bank's website.
  • When it's your bank on the line, you can expect helpful service.

A fraudster's goal is to keep you on the line as long as possible. Don't even bother talking to them about it, just hang up and contact your bank or online payment system.

The pair claims that they have attempted to get in touch with Revolut many times but have only received boilerplate responses.

Established in 2015, digital banking platform Revolut now counts 25 million users and more than a million daily account activations.

In 2018, the Bank of Lithuania supported fintech by issuing it a European banking licence, and its founder and CEO, Nikolay Storonsky, built the platform to facilitate cheaper currency transfers.

While Revolut reapplied to the Financial Conduct Authority for a UK banking licence in 2021, the e-money company still lacks official approval.

Revolut card had been used for a small family business; but Revolut has no FCA-approved banking licence

Mrs. Crooks recently revealed to the media that the family's new company had been utilising a Revolut account for its financial transactions.

We think these online banking services are a great approach to streamline the way your company handles its financial transactions online.

The infrastructure of traditional banks is not on par with that of internet banks. To keep track of finances and other such matters, their applications make things a lot simpler.

We opted for the easiest option. We were trying to think, “What would work for a starting company? What would enable us to cost easily? What appeared to check a lot of boxes?”

She said that before the theft occurred, everyone treated the platform and app-based competitors like Chase — this one which lacked a UK banking licence — as if it were a regular bank.

They are not a registered bank, however this is not immediately apparent. If more people knew that, they may think twice about doing it.

“Certainly now there are things that have come out that sort of ring warning bells and maybe if we had known at the time we would have been a little more careful,” the author writes.

Mrs. Crooks said she had not received any alerts about the Apple Pay purchase.

Security checks had reportedly been cleared by fraudster; Apple 3DS system blamed

When she questioned Revolut about the lack of warning and the unblocked payment, an assistant explained that Apple Pay transactions bypass certain security checks.

To be more specific, “In reality, our staff was able to confirm that the aforementioned payment was authorised by Apple Pay.”

Apple Pay has its own built-in security system, so there's no need to go through the 3DS authentication process. So now you know why you weren't notified before such a major financial transaction.

It was Revolut's job to notice the unusual spending, since Apple Pay has no control over whether or not a customer's card is authorised.

The pair has complained about Revolut to the Financial Ombudsman Service, but they don't expect to receive any of their money back.

According to Mrs. Crooks, “they've just essentially washed their hands of it with one fairly generic email, so I don't know how else to go any place with it”.

Loyalty of Revolut to customers further questioned

That's not acceptable; this isn't a £100 deal. Money of this magnitude may completely alter one's circumstances.

No one is receiving serious answers, and it's all just so much fluff. It might seem that they are assisting clients, but in reality, this is not the case.

The mother of two children said that the fraud had caused the family to lose all of their money and forced them to reduce their children's childcare attendance.

I just can't get my brain around it; it's so surprising. Clearly, we haven't been getting enough rest.

We're a working couple with two small children. Because we no longer have access to those funds, I have had to make adjustments to the nursery care my children previously received.

“It's the continual pressure of worrying about it, of having to deal with it every day, of having to send out these emails and keep trying to make connections and find new ways in. That just isn't the way things should be.”

Card fraud affected the Crooks, but Authorized Push Payment (APP) scams are also common, in which victims are duped into wiring money to accounts controlled by con artists.

In 2022, the Financial Ombudsman received 900 complaints regarding Revolut related to APP frauds, and 594 were upheld.

There are about five times as many complaints as Revolut had in 2020 and nearly three times as many as in 2021. In contrast, the rate at which they acquire new customers has grown at the same time.

The number of complaints about fraudulent APPs at other challenger banks has increased.

In 2022, the FDIC received 9,844 reports of APP frauds across all financial institutions.

Challenger banks are smaller commercial banks that aim to take on the industry's more established players.

Once the Payment Systems Regulator developed a voluntary agreement to aid victims of APP scams in 2018, numerous traditional banks pledged to provide restitution to those affected.

This further gives momentum to Revolut’s rivals. Starling (Starling Bank review) mobile banking app, for instance, has been downloaded over 5 million times (1m on Google Play alone) and has received a 4.1 star rating out of almost 101,000 reviews. 4.6 out of 5 stars in the Apple App Store. 

Revolut yet to join the CRM

Just 10 online bank companies have signed on to the Contingent Reimbursement Model (CRM) yet; Revolut is not one of them.

The new challenger banks and e-money institutions, according to cyber security expert James Bore, have not been taking fraud and client protection seriously.

To paraphrase, “I spent some time employed by a competitor bank. I quit because I did not think they took security or fraud seriously enough.”

They don't seem to be spending money on anti-fraud technology. They're barely scraping by, hardly making an attempt to meet FCA requirements.

There isn't much effort being made to improve the security features. While creating and distributing their programmes, they don't consider the safety of their consumers. This is a fairly laid-back way of thinking.

In addition, he said that most electronic money platforms enjoy many of the advantages of conventional banks while not being subject to as many stringent laws.

In addition, several Revolut users who have fallen victim to fraud have complained that the service either didn't listen to them or rejected their complaints with unspecific explanations.

Polly Arrowsmith, a chartered accountant and financial expert, told MailOnline that Revolut often disappointed its consumers.

Although they do have a good TrustAdvisor rating, the one area where they consistently fail is in customer service. This includes failing to keep customers updated and making them feel as if their complaints or questions are being ignored.

“Accounts may be frozen at any time, which is typical procedure for banks when they suspect fraud.”

They are unable to get their hands on money because these complaints keep piling up. That's a problem, clearly.

Cases like this have a deeper implication than monetary loss; leading to personal hits

Ms. Arrowsmith noted that it was rare for customers of Revolut to be unable to communicate with a human when their funds disappeared.

According to the Financial Conduct Authority, “the impact a fraud might have on someone is unlikely to be solely financial”, meaning that businesses should treat their clients with respect and provide them enough help.

The Financial Ombudsman Service is the place to go if you have a complaint about a company and are unsatisfied with how they handled it.

In the case of unauthorised fraud, FCA guidelines provide that clients of banks and payment service providers should be reimbursed unless it can be shown that the consumer behaved carelessly.

In an interview with MailOnline, Revolut answered many questions.

They said that Mr. and Mrs. Crooks' first purchase was not flagged as suspicious due to Apple Pay's historically low fraud rates.

Card information has been removed and the account is safe, however Revolut is not offering reimbursement because of the warning they sent against disclosing the one-time passcode.

Although the digital currency platform is not officially part of the Contingent Reimbursement Model, it claims to use very similar criteria when determining whether or not to provide reimbursement.

Customers' entire exposure to APP fraud has been cut by two-thirds since the beginning of the year 2022, thanks in large part to the 98% detection rate generated by our methodology.

We will continue to put in long hours and think outside the box to make sure our consumers are safe from harm.

More than 25 million clients have put their faith in Revolut, the company said. We operate legally as a financial institution in the UK and abroad.

Our clients who have been the victims of fraud get the same level of protection and assistance that they would receive from a bank thanks to our authorization status.

Takeaway — Concerns about Revolut's cryptography

This is not the first large report of unrequited attention after a customer has been scammed not due to their own personal fault. 

With an immense digital banking market share being eaten away by names like Monzo and Revolut, Brits are more comfortable with banking online. However, news releases like this threaten to weaken adoption. 

More stringent regulations for Revolut's cryptocurrency trading platform are in the works at the ministerial level.

Investors who practise taking' in the hopes of earning double-digit returns on their cryptocurrency holdings may soon be subject to stricter regulations.

This week, Revolut launched a staking option, giving its customers another way to invest in the company's 100+ supported cryptocurrencies.

Staking platforms like Kraken were recently shut down by US authorities who argued that the practice should be regulated since it is comparable to lending.

According to a statement made by Revolut to The Telegraph, “Revolut embraces clear crypto legislation and our products are always delivered in conformity with all relevant rules.”

When Deborah Wright had £8,000 stolen from her Revolut accounts in October, she was understandably upset.

She had hoped to get her money back from the company that issued her the electronic currency, but it had declined. There have been several reports of scam victims having trouble obtaining their money back from Revolut.

Revolut, in contrast to banks, has not agreed to follow any voluntary guidelines mandating the reimbursement of clients who fall victim to this kind of scam.

The company said it evaluated each situation independently and expressed regret for any deception it may have caused to its clients.

Read more for our guide to Monzo vs Starling Bank… 

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