LONDON: Revolut Ltd has denied thousands of UK customers’ requests to be reimbursed after they were defrauded by scammers, leading many of them to turn to the country’s Financial Ombudsman Service (FOS) for help with their case.

The financial technology (fintech) giant saw a 35% surge in new fraud complaints from customers in the second half of 2023, the latest period for which data is available, according to figures provided by the ombudsman.

That topped all rivals and UK lenders and comes as regulators ramp up efforts to tackle online scams plaguing the industry.

New complaints faced by Revolut jumped to 2,208 in the period, from 1,630 in the first half.

That compares with an almost 10% decline at Barclays Plc’s local operations, about a 3% reduction at Lloyds Banking Group Plc and a 1% increase at HSBC Holdings Plc’s UK unit.

For years, lenders have been battling so-called APP fraud, perpetrated typically by criminals tricking unsuspecting bank customers into sending a payment online to an account outside their control.

The scams, including those involving card payments and investment schemes, have inflicted losses in the millions of pounds on UK customers as well as banks.

How Revolut responds to such crimes has gained added significance as British policymakers prepare to introduce new rules that require banks and fintechs to reimburse customers who fall victim to scammers.

The industry has argued the new rules will be costly and ultimately do little to stop fraud.

A representative for the FOS said the ombudsman has investigated thousands of cases in recent years, helping return more than £150mil (US$195mil) to victims of such crimes.

Revolut said it takes fraud and the risk of customers being coerced by organised criminals “incredibly seriously.”

In almost half of all cases it reviewed and closed last year, the ombudsman ordered Revolut to reimburse customers for their losses, the data show. Even so, separate data from law firms representing the fintech’s customers show the fintech giant has continued to deny customers’ claims.

“Each potential fraud case concerning a Revolut customer is carefully investigated and assessed independently of other cases,” a representative for the company said, adding the firm also revisits liability considerations as a result of complaints wherever errors are identified.

The fintech also said it complies with the ombudsman’s decision.

CEL Solicitors, a large consumer claims firm, said Revolut has rejected 99% of the complaints they’ve sent from scam victims and as a result they have 1,502 Revolut cases currently filed with the FOS.

TLW Solicitors, another firm that represents about 100 Revolut customers, said a number of these cases were referred to the FOS.

The Revolut representative said the company has robust protections in place for its customers and it analyzes over half a billion transactions a month.

The fintech said it uses resources including artificial intelligence models, more than 4,000 trained anti-financial crime professionals as well as experienced data scientists, and it prevented more than £475mil of potential fraud last year.

In a Bloomberg Television interview this week, Revolut’s UK chief executive officer Francesca Carlesi said one of her primary focuses since joining the company has been to bolster the firm’s fraud controls.

While Revolut is readying itself for the new regime, it’s also building tools to try to stop fraudsters before they steal consumers’ money, she said.

“It’s becoming increasingly sophisticated,” Carlesi said. “It is a national emergency, it needs to be fought like a normal crime.”

 - Bloomberg