Giant online money company Revolut is at the center of a huge spike in fraud cases. Fraudsters are increasingly targeting customers and using their accounts to carry out sophisticated scams, according to industry insiders.
Revolut offers checking account-style banking, where users can make payments online and in stores using a debit card.
It now has six million customers, many of whom were attracted by the offer of free spending on its card abroad.
Services: Revolut provides current account type banking services where users can make payments online and in stores using a debit card
The UK-based tech company is believed to be on the verge of receiving a full banking licence, which will allow it to offer financial products such as loans, mortgages and credit cards.
But a Money Mail investigation has found the company – hailed as one of the UK’s biggest ‘fintech’ success stories – is overwhelmed with scams.
The number of crime reports to scam-reporting body Action Fraud rose to 7,198 last year, up 81% from 3,975 in 2021.
It was the fourth highest figure for any company offering current account type services, behind Barclays, Lloyds and Santander.
This year the trend has accelerated, with 573 crime reports in January alone, making Revolut the most criticized “banking” company other than Barclays, despite having far fewer customers than traditional banks.
Action Fraud data also covers those who have stolen money through a scammer’s Revolut account or created a fake one in their name.
Industry insiders told Money Mail they had seen Revolut customers targeted with convincing phishing links in text messages, asking them to verify details or have their accounts frozen.
When the victims click on the link and enter the details on a fake login page, the crooks gain access to their account.
In other cases, scam victims received phone calls from fraudsters posing as banks or telecommunications companies, warning them that their account had been hacked. The scammers ask for personal information such as debit card numbers and a copy of an ID, and fraudulently create a Revolut account in that name.
Other cases involve victims lured by fake online cryptocurrency brokers. Criminals advise opening a Revolut account, as cryptocurrency trading is allowed in its app.
Victims are asked to pay an initial “deposit” before they can start investing, but then scammers steal these fees.
At the forefront of digital banking: Nikolay Storonsky, a British businessman who grew up in Russia, created Revolut
In contrast, the TSB and challenger bank Starling have banned cryptocurrencies entirely due to fraud risks. Santander has limited the amount customers can pay to cryptocurrency exchanges.
Fraud investigators say criminals are taking advantage of the ease of transferring money in and out of Revolut and the speed of setting up an account. Its website explains how you can create an account in minutes on your phone. You don’t have to go to a branch or fill out a lot of paperwork.
Founded by Nikolay Storonsky, 38, a British businessman who grew up in Russia, Revolut offers checking account-style banking services without Financial Services Compensation Scheme (FSCS) protection or overdraft facilities. The FSCS protects users up to £85,000 if an authorized bank goes bankrupt.
The company has also faced an increase in cases sent to the Financial Ombudsman Service (FOS), the last port of call if a complaint is dismissed by a financial firm.
In the first two months of this year, the FOS received 486 new fraud and scam complaints at Revolut – just behind Barclays and ahead of big banks such as HSBC, Lloyds and Santander. During the same period last year, it received 132 complaints.
Phishing company: Revolut customers are said to be targeted with convincing phishing links in text messages, which ask them to verify details or risk having their accounts frozen
Revolut recorded 56% of complaints in favor of customers last year, the highest percentage of the ten ‘banking’ companies on the list.
Just over half of this year’s complaints involved authorized 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 the code as it is not currently an approved bank.
Revolut customers have also complained of difficulties contacting its customer service team, which can only be reached through the smartphone app.
Last week auditor BDO highlighted issues with Revolut’s accounts. BDO said £477million in revenue – three-quarters of its turnover of £636million – could not be verified.
Revolut says its customer base has grown significantly since 2019 and complaints have risen commensurately.
He says the pace at which customers approach the FOS is comparable to that of existing banks.
It says it has invested in its systems, processes and people to ensure it protects its 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 through its in-app chat service.
A spokesperson adds: “Although we are not registered [to the banks’ reimbursement scheme]we apply similar standards when deciding to reimburse customers.
Some links in this article may be affiliate links. If you click on it, we may earn a small commission. This helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any business relationship to affect our editorial independence.