Nationwide accused of presenting legal right to fraud refund as an account perk
Which has said Nationwide Building Society risks misleading customers by dressing up a 'fraud guarantee' on its current accounts as a special perk when the protection is in fact a legal right.
Nationwide, Britain's biggest building society, ran a December advertising campaign boasting of an 'immediate refund' to any victims of ID fraud.
But Which argues this guarantee is no more than a 'legal right' because every bank and building society covers genuine fraud losses as standard.
Sales trick: Nationwide's advertising campaign has come under fire from Which
Because Nationwide presents its fraud protection as a unique service, Which argues the building society is flirting with false advertising.
The consumer champion says any company pushing a product 'by emphasising a benefit that is a legal right' could be breaching the Consumer Protection from Unfair Trading Regulations.
James Daley, editor of Which Money, says: 'Although Nationwide may not be asking customers to pay for a benefit which they already have, it is using it to entice new current account customers, which we think could also be in breach of the same regulations.'
The voice-over on Nationwide's pre-Christmas 'On Your Side' TV ad campaign (see video below) ran: 'With a Nationwide current account, if you're shopping online or on the High Street this Christmas and we find that you've been a victim of fraud through no fault of your own, we'll ensure that the money is returned to your account immediately, so you don't lose a penny.'
Which is also worried 'giant' posters promoting the fraud protection in Nationwide branch windows give a misleading impression.
When the On Your Side campaign launched, Nationwide marketing director Andy McQueen pointed out recent fraud figures from Financial Fraud Action UK, which showed an increase in losses from cheque and telephone issues in the first half of 2011, rising to 16.4million and 8.6million, respectively, as a reason for the plug.
But Financial Fraud Action UK itself says paying compensation is simply a duty for current account providers when thieves raid an account. Since 2009, Payment Services Regulations have enshrined this as a legal requirement.
A refund can only be refused on 'reasonable grounds' of negligence on the part of the customer, Financial Fraud Action says. This might include telling a friend a PIN number or writing password details down. The onus is on the bank to prove a customer has been careless.
Which Money editor, James Daley, suggested that Nationwide's guarantee looks 'very similar' to the 40 a year fraud protection offered by some rivals.
Financial Fraud Action UK warned strongly on this type of cover, which provides sparse benefits. Its spokesman said: 'From a financial perspective, the insurance is superfluous.
'Sometimes frauds can have further consequences in that personal details are stolen and it might take time to arrange replacement products, talk to authorities, etc.
'If you feel you could benefit from these services the additional protection might be worth taking out. But it is always important to read the fine print to determine what exactly you are getting and whether it is worth it for you.'
Nationwide said the marketing was 'absolutely not intended to mislead' and says it goes 'above and beyond' the legal requirements to help affected customers.
A spokesman said: 'We know that fraud is an area of concern for many of our members and we think that many are unaware of the legal requirements for innocent victims of fraud to be refunded immediately.
'This is just one of the ways in which Nationwide helps to protect its members and we wanted to highlight it.'