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Bank Fraud: Easy to be a victim - hard to get your money back?

Each year, over 900,000 of us find that thieves have used our card details to make purchases or to withdraw money from our accounts. However, proving that fraud has taken place on your account can be difficult. To help protect customers, the FSA has drawn up new rules, making it easier to claim refunds on disputed transactions. But are all the banks taking notice? Riz Lateef reports.

Video: Bank Fraud

Thieves drain our bank accounts of more than £300 million pounds every year. There are many ways they do it - from using cards or card details to order items in shops, on the phone or internet to even stealing your identity to take over your entire account.

Criminals may find it easy to defraud you, but persuading your bank that they've done so can be a lot tougher. The FSA rules say that if you deny having authorised a payment, the bank should give you the benefit of the doubt unless they can prove otherwise. But we've found some banks using pretty flimsy excuses to refuse refunds.

Kulvir Kooner recently went on holiday to India. While he was away, a fraudster claiming to be him called Natwest and managed to alter his personal details. He changed Kulvir's place of residence from Slough to Nottingham and persuaded the bank to send out a new card. Once it arrived at this new address, the fraudster proceeded to empty Kulvir's account of more than £18,000.

Almost £5,000 of that total was stolen by transferring it to other accounts which Natwest has now refunded. However, most of the other £13,000 which came from ATMs and cash withdrawals, was not refunded by the bank. Despite Kulvir being 4,000 miles away at the time, Natwest say these withdrawals could not have been made without him being present, or having disclosed his PIN number.

Card Fraud expert Richard Emery disagrees. Having reviewed Kulvir's case, he drew attention to two transactions which were done in over the counter withdrawals. Richard commented: "Kulvir was away on holiday at the time, he couldn't possibly have done those transactions. Therefore the bank must refund his money."

Fraudulent use of your bank card is often obvious - the thief has spent money in a place you've never been to, or on goods that you've never bought. But, if your card has been used for a transaction with a retailer you have used before, good luck getting a refund from Barclays.

Ray Saddington returned from a holiday in Cyprus to find two unauthorised payments had been made on his card. He would later discover that they were to the DVLA, for tax discs on cars he didn't even own. They were for a purple Volvo and a silver Mondeo. Ray approached his bank for a refund but was told that the transaction weren't fraud because he had used this merchant before.

Yes, you heard that right. If a criminal uses your card to buy something from a retailer - and you've used that same retailer before - Barclays might not be prepared to accept there's been fraud. Why? It could either be that the retailer has your details and may have accidently debited your account or because this is in line with your normal pattern of spending.

Trouble is, if you're a motorist and you need to buy a tax disc, then there's only one supplier available: the DVLA. Expert Richard Emery doesn't think this is fair. Richard commented: "The regulations say that the firm has to prove that the payment was authorised. To argue that the payment was authorised simply because the customer has made purchases from this company in the past is a completely unreasonable argument."

Despite being able to prove the cars weren't his, Ray couldn't get a refund from Barclays. Having taken two months to even provide him with details of the transactions, they gave him just ten days to dispute them. But, as he was out of the country at the time, he missed the deadline.

If thieves want to make a fraudulent telephone or online purchase, they don't need your card, just your card details. They use sophisticated techniques to obtain these, even going so far as to hack into retailers' databases. You may be completely unaware that a criminal has got hold of your details, but you could still be held responsible.

Dharmadev Trivedi is a junior doctor and another Barclays customer. Last October the bank noticed a number of unusual transactions on his card, one of which was made at a hotel in Northampton. However, he was working at the time in Leeds - which is 120 miles away.

The bank cancelled Dharmadev's card and stopped a number of transactions, making him feel reassured. However, there was a purchase at a hotel in and some food purchased from a food website and to Dharmadev's surprise, they were re-debited from his account.

Although Barclays later refunded him the hotel bill, they refused to refund the money for the food order. They used the same excuse as they had given Ray - that it was not a 'fraudulent transaction because he had used the retailer before'. Dharmadev recognised that he had used the retailer before, but also noted that thousands of others had done so as well.

After three months, Dharmedev did manage to persuade Barclays to refund the money. However, it was only given as a 'goodwill gesture'. Despite the fact they couldn't prove he'd made the transaction, they still felt he was to blame.

In the letter to Dharmadev, Barclays wrote that 'the fact that the card has been misused clearly indicates that the card was not adequately protected against misuse.' After seeing the letter from the bank, expert Richard Emery said that this statement was 'ridiculous.' He added: "This gentleman has protected his card, somebody has managed to use his card number and that's a very different matter. As cardholders we are clearly responsible for making sure that we keep our physical cards safe. But lots of people have access to our card details and we cannot prevent some of those people from misusing those details."

The FSA now says banks should give customers the benefit of the doubt when they claim to be victims of fraud - unless they can prove otherwise. It's a shame some of those banks don't seem to be listening...

Company Responses

A NatWest spokesperson said:

"NatWest would like to thank Mr Kooner for his patience during the time taken to investigate the specifics of his case. The fraud that occurred was complex and required a comprehensive investigation. However, we're pleased to say all of his money has now been refunded. We appreciate this must have been a difficult time and we can reassure Mr Kooner, and our other customers, that NatWest continually develop their anti-fraud measures.''

A Barclays spokesperson said:

"We have no higher priority than the security of our customers' money and Barclays guarantees to compensate genuine victims of fraud. We regularly pay out in over 85 per cent of fraud cases.*

"When we do get things wrong we put our hands up and take swift action to put it right.

"Mr Trivedi has already been refunded for all the money he lost, but it is now clear we wrongly held him liable for one payment which was fraudulent and for this we are sorry.

"Mr Saddington disputed two payments made from his account but unfortunately we failed to investigate within industry timeframes and this meant that we were not successful in getting the money back from the merchant. This is not Mr Saddington's fault and it is unfair that he should lose money. We are pleased to confirm that we will refund the fraudulent transactions totalling £209, as well as a gesture of goodwill of £50 for the inconvenience we have caused."

*68 per cent are refunded immediately and a further 17 per cent refunded after further investigation. Of the remaining 15 per cent the customer either no longer wishes to pursue the fraud claim; the customer has recovered the funds or the customer has been held liable.