Revolut's Fraud Concerns Spark Questions About Customer Protection

Revolut, the popular fintech company with over 45 million customers worldwide, has found itself under scrutiny after a BBC Panorama investigation revealed that the company has been named in more fraud complaints than any major UK bank. This revelation has sparked concerns about the effectiveness of Revolut's security controls and the level of protection offered to its customers.

The investigation centered around the story of a Revolut Business customer who had £165,000 stolen from his account. The victim, who wished to remain anonymous, claimed it took 23 minutes to reach the right department to freeze his account, during which time another £67,000 was taken. He expressed frustration with the app's lack of automatic detection of potentially suspicious activity, such as a large number of transactions to a new payee.

Revolut's Response and the Importance of Understanding FSCS Protection

Revolut has responded to these allegations by acknowledging that a “small number” of its customers have had negative experiences. However, the company maintains that these experiences do not represent the majority of its customers who continue to enjoy Revolut's services. They emphasize their commitment to combating fraud and adherence to industry standards.

Despite Revolut's assurances, the investigation has brought to light a critical issue: Revolut, as a digital-only financial institution, does not have a physical branch and is not yet a bank. This means that, until recently, deposits made with Revolut were not protected by the Financial Services Compensation Scheme (FSCS). The FSCS is a UK government-backed scheme that protects customers' deposits up to £85,000 in case a bank fails. While Revolut has secured a UK banking license, its conversion to a fully-fledged bank is still ongoing. This means that while Revolut is working towards offering FSCS protection, it's not fully in effect yet.

Understanding Revolut's Safeguarding Measures

Instead of FSCS protection, Revolut relies on “safeguarding” to protect customer funds. This means that the company keeps these funds in a separate account, preventing them from being used for lending purposes. This, in theory, ensures customers can retrieve their funds if Revolut were to collapse. However, there are concerns that these funds might be subject to “admin fees” if a customer needed to access them.

The New Payment Systems Regulator Rules

Despite not being a bank, Revolut is still subject to new rules from the Payment Systems Regulator (PSR) regarding fraud reimbursement. These rules apply to payment firms that utilize faster payments or Clearing House Automated Payment System (CHAPS) systems. Under these new rules, Revolut, like banks, is obligated to reimburse victims of authorized push payment (APP) fraud up to £85,000 within five days. This type of fraud involves victims being tricked into sending money to a fraudster.

What to Do if You Fall Victim to a Scam

If you suspect you have fallen victim to an APP scam, you should immediately contact Revolut and report the incident. They will assess the situation and determine whether you qualify for reimbursement based on the PSR's criteria, which include verifying that you were not negligent in the situation. If you are dissatisfied with Revolut's decision, you can escalate the case to the Financial Ombudsman Service (FOS) for further investigation.

Revolut's Commitment to Fraud Prevention

Revolut has stated its commitment to combating fraud and protecting its customers. The company has stated that it prevented more than £475 million worth of potential fraud losses globally in 2023. However, the investigation highlights the importance of continued vigilance from both fintech companies and customers in preventing fraud. It is crucial for customers to be aware of the potential risks and take necessary precautions to protect their funds, including being cautious about suspicious transactions, verifying information, and being vigilant about sharing sensitive data.

Revolut's Future and the Importance of Customer Protection

As Revolut continues to grow and expand its services, the company will need to prioritize enhancing its security measures and improving customer protection. The recent allegations serve as a reminder of the crucial role that financial institutions play in safeguarding their customers' funds. As Revolut evolves toward becoming a fully regulated bank, it is essential that it addresses the concerns raised and prioritizes transparency and customer protection in all its operations. While Revolut's commitment to combating fraud is commendable, the company's future success will depend on its ability to build trust with its customers by providing robust security measures and ensuring they are adequately protected from financial harm.

Revolut's New Payment Terminal

While Revolut deals with these concerns, the company also has exciting news. Revolut has announced the launch of its new point-of-sale (POS) device, the Revolut Terminal, which is designed to help businesses accept payments quickly and securely. The Terminal is now available for pre-sale in the UK and will be available in Ireland in the next month. Revolut Business customers can pre-order the device at a discounted price.

Features of the Revolut Terminal

The Revolut Terminal offers several features that are designed to make it an attractive option for businesses:

• Speed: Revolut Terminal processes payments in seconds.

• Reliability: The Terminal boasts a 99.9%+ platform uptime, ensuring businesses can accept payments even during peak periods.

• Connectivity: Integrated Wi-Fi and SIM connections ensure the Terminal is always ready to take payments, regardless of location.

• Battery Life: The Terminal's battery lasts all day, ensuring it can be used for long periods without needing to be recharged.

• Revolut Pay: The Terminal integrates seamlessly with Revolut Pay, allowing customers to pay directly from their Revolut app and earn RevPoints, loyalty points that can be redeemed for discounts.

• Lower Fees: Revolut Pay transactions offer merchants lower fees compared to traditional payment methods.

• Seamless Integration: The Terminal syncs seamlessly with Revolut Business accounts, providing easy access to funds and advanced analytics.

Revolut's Commitment to B2B Growth

Revolut's launch of the Revolut Terminal reflects its commitment to expanding its B2B offering and providing innovative solutions for business customers. The company has experienced significant growth in its Revolut Business division, exceeding $500 million in annualized revenue and onboarding over 20,000 new customers per month. With its focus on the hospitality and retail industries, Revolut aims to become a leading player in the POS market and provide businesses with a comprehensive and reliable solution for accepting payments.

Revolut's Future Prospects

Revolut's success story has been marked by its relentless pursuit of innovation and its commitment to offering a wide range of financial services to its customers. From its initial focus on providing low-cost money transfers to its expansion into banking, investments, and insurance, Revolut has become a major force in the fintech industry. Despite the recent allegations of fraud, Revolut remains well-positioned for future growth, especially in the B2B space. With its innovative products, commitment to customer satisfaction, and continuous investment in new technologies, Revolut is poised to continue disrupting the financial services industry and challenging traditional banks.