Lloyds Bank has formed an industry working group with Chargebacks911 and other payment platforms to tackle the growing issue of scams involving fake websites.
This move follows Lloyds’ warning regarding a prevalent scam where fraudulent retailers create fake websites to deceive people into buying items that are never shipped, resulting in an estimated £6.6m in losses to date.
The bank has reported that tens of thousands of credit and debit card customers have been affected, with an average loss of £55 each. The scam’s rise has led to a 211% increase in card payment disputes over the past year.
The scam involves rogue retailers using social media to promote fake websites that mimic well-known brands. For instance, a company named SM Wallet created imitation sites for brands like House of Fraser, Office and Superdrug, offering enticing discounts to lure people into making purchases.
Customers who buy from these fake websites often never receive their items or something of much lower value. For example, one Lloyds Bank customer ordered Dior perfume but received a child’s ring instead.
Gavin Evans, Senior Manager for Consumer Cards at Lloyds Bank, said: “It’s sad to see another scam on the rise, tricking people into parting with their hard-earned cash. When we spot a bargain online, it can be tempting to snap it up, but it’s important to remain vigilant and know that rogue retailers use social media to promote significant discounts on goods they have no intention of delivering. Remember the old adage – if something appears too good to be true, it usually is.”
Unfortunately, many victims of these scams have difficulty recovering their money. Lloyds Bank data reveals that fewer than 30% of those who bought from known scam websites reached out to their bank to dispute the charges.
To assist victims, Lloyds has provided guidance on the steps to take if affected. The bank says that if a retailer denies a refund, customers can dispute the transaction online or via their mobile banking app, and their bank may help by initiating a chargeback or Section 75 claim to try and recover the funds.
In addition to providing guidance, Lloyds has established an industry working group with Chargebacks911 and other payment platforms to identify and block transactions from known fake websites. The group is also urging payment platforms, or acquirers, to implement stricter controls to prevent rogue retailers from setting up and processing payments.
Evans concluded: “It’s also crucial to check the web address if you’re planning on making an online purchase, making sure it’s familiar and matches the brand you are trying to buy from – particularly if you opened the website by clicking on an advert or social media post. If you don’t recognise the web address, apply extra caution by checking online reviews of the website and consider buying from somewhere you trust instead.”
Earlier this year, Lloyds Bank alerted Premier League football fans about a surge in ticket scams. The bank advised fans to purchase tickets only through official channels, noting a 32% increase in ticket-related scams during the 2023/24 season compared to the previous year.