Giant online money firm Revolut is at the centre of a huge spike in fraud cases. Fraudsters are increasingly targeting customers and using its accounts to carry out sophisticated scams, industry insiders say.
Revolut provides current account-style banking, where users can make payments online and in shops using a debit card.
It now has six million customers, many of whom have been lured by the offer of fee-free spending on its card overseas.
Services: Revolut provides current account-style banking where users can make payments online and in shops using a debit card
The British-based tech firm is believed to be on the cusp of receiving a full banking licence, which will enable it to offer financial products such as loans, mortgages and credit cards.
But a Money Mail probe found that the firm — lauded as one of the UK’s biggest ‘fintech’ successes — is being swamped by scams.
The number of crime reports made to scam reporting body Action Fraud ballooned to 7,198 last year, up 81 per cent from 3,975 in 2021.
That was the fourth highest figure for any firm offering current account-style services, trailing only Barclays, Lloyds and Santander.
This year, the trend has sped up, with 573 crime reports in January alone — making Revolut the most complained-about ‘banking’ firm other than Barclays, even though it has far fewer customers than mainstream banks.
The Action Fraud data also covers those who have had stolen money funnelled through a crook’s Revolut account or had a bogus one set up in their name.
Industry insiders told Money Mail they have seen Revolut customers targeted by convincing phishing links in text messages, which ask them to verify details or face having their accounts frozen.
When victims click on the link and input details on a fake sign-in page, scammers access their account.
In other cases, scam victims have received phone calls from fraudsters posing as banks or telecoms firms, warning them that their account has been hacked. The crooks ask for personal details such as debit card numbers and a copy of an ID, and set up a Revolut account fraudulently in that name.
Other cases involve victims being lured in by fake cryptocurrency brokers online. The criminals advise that they open a Revolut account, as cryptocurrency trading is allowed in its app.
Victims are asked to pay an upfront ‘deposit’ before they can begin investing, but fraudsters then steal this fee.
Leading the way in digital banking: Nikolay Storonsky, a British businessman who grew up in Russia, set up Revolut
By contrast, TSB and challenger bank Starling have banned cryptocurrencies entirely because of fraud risks. Santander has restricted the amount that customers can pay to cryptocurrency exchanges.
Fraud investigators say that criminals are taking advantage of the simplicity of moving money in and out of Revolut and the speed of setting up an account. Its website boasts how you can set up an account within minutes on your phone. You do not have to visit a branch or fill out extensive paperwork.
Founded by Nikolay Storonsky, 38, a British businessman who grew up in Russia, Revolut offers current account-style banking without Financial Services Compensation Scheme (FSCS) protection or overdraft facilities. The FSCS protects users up to £85,000 if an authorised bank goes bust.
The company has also faced a surge in cases sent to the Financial Ombudsman Service (FOS), the last port of call if a complaint is rejected by a financial firm.
In the first two months of this year, the FOS received 486 new complaints about fraud and scams at Revolut — second only to Barclays and ahead of major banks such as HSBC, Lloyds and Santander. In the same period last year, it received 132 complaints.
Phishy business: Revolut customers are reportedly being targeted by convincing phishing links in text messages, which ask them to verify details or face having their accounts frozen
Revolut had 56 per cent of complaints upheld in favour of customers last year, the joint highest of the ten ‘banking’ firms in the list.
Just over half of the complaints this year were authorised push payment (APP) fraud, where a victim is tricked into sending money to a fraudster.
In 2018, many major banks pledged to reimburse victims of APP fraud under a voluntary code designed by the Payment Systems Regulator. Revolut has not signed up to the code as it is not currently a licensed bank.
Revolut customers have also complained about difficulties in contacting its customer services team, who can only be reached through the smartphone app.
Last week, auditor BDO highlighted problems with Revolut’s accounts. BDO said £477 million of revenue streams — three quarters of its £636 million turnover — could not be verified.
Revolut says its customer numbers have increased significantly since 2019 and complaints have grown proportionately.
It says the rate at which customers approach the FOS is comparable to existing banks.
It says it has made investments in its systems, processes and people to ensure it protects customers as it grows and has several controls in place to prevent scams.
Revolut says it would never call a customer without first contacting them via its in-app chat service.
A spokesman adds: ‘While we are not signed up [to the banks’ reimbursement scheme], we apply similar standards when deciding to reimburse customers.’