Bank fraud is when either individuals or entities use illegal methods to gain access to money, assets and any kind of property that is held by a financial provider.
Card and online bank fraud explained
There are different kinds of bank fraud depending on what is targeted and what methods are used to gain access:
Debit card fraud and credit card fraud is when someone has used your card to purchase goods or services in a store or online without your knowledge or permission.
Electronic fraud is when your money is transferred or withdrawn illegally by an external party. This is usually done by fraudsters duping you into providing sensitive information, such as your online banking details, to gain access to your accounts.
Identity theft happens when someone uses your identity to open new accounts, apply for credit cards, or purchase a number of other financial products or services.
Signs you’ve been hit by bank fraud
You may have fallen victim to bank fraud if:
- You’ve lost your debit or credit card recently and haven’t yet reported it missing
- There are transactions on your account you don’t recognise
- Your card has gone into overdraft or hit its spending limit without you being responsible for it
Tips on how to deal with bank fraud
If you’ve been hit by card fraud, here are a few measures you can take to minimise the effects:
- Report your stolen card to your bank provider immediately
- Keep an eye on your credit report and bank statements for any other unusual activity
- You can also contact action fraud by using the online reporting tool on the website
- Claim your refund with the bank
Rules and regulations
When it comes to debit card fraud you’re covered under the ‘payment services regulations’ which makes sure you’re refunded any money that has been used without your consent. However, you won’t be covered until you report your debit card as lost or stolen.
If money is taken from your account before you get the chance to report this, you may be liable to pay up to £35 of the initial sum taken from your account.
With credit card fraud you’re covered under the ‘consumer credit act’ so you’ll be able to claim your money back as the liability is shared between both you and your credit card provider. You may have to pay for the first £50 lost if you don’t manage to report your stolen card early enough.
How do banks react to fraud claims?
Your bank will usually start the process of resetting your security details. This includes a PIN and password update through an automated process after speaking to an agent. They will also block your existing cards and may even freeze your account for a short period of time until you regain control of your account.
Banks usually refund any stolen money quickly, often within one or two working days after you report the problem.
What do I do if my bank rejects a claim?
Your bank has the right to refuse the refund if they can prove you authorised the transaction or if they can give evidence that you acted either negligently or fraudulently. This includes:
- Leaving it too late to report unusual activity on your account
- Leaving it too late to report your stolen debit card
- Failing to protect your pin number or password
As per FCA (financial conduct authority) guidelines, you’ll have to report bank fraud within 13 months of the illegal transaction taking place.
The bank will then take a few days to investigate and delay the refund. However if your bank deems that you’re not owed a refund, the only way to get your money back is by taking the person who stole your money to court.
It’s best to make a complaint to the bank provider itself if you aren’t happy with how your claim was dealt with – in rare cases, this can lead to a re-investigation. You can also file a complaint with the financial ombudsman who, if they side with you, can order compensation to the bank provider.
How to prevent bank fraud
There are a lot of things you can do to minimise the risk of falling victim to bank fraud. Here are a few precautions to consider:
- Shred letters that contain your personal information – anything with your name, address or financial details are classed as sensitive information
- Never share your bank details to third parties including your login details to your online banking
- If a caller claims to be your legitimate bank provider, ask them to provide their main switchboard number so you can be routed back to them. You can always hang up and call them back on their legitimate phone number
- Keep an eye on your bank statements and report any unusual activity immediately
- Always redirect your post when you move houses – you can do this by reporting a change of address with the Royal Mail
- When internet banking, it’s best to visit the bank provider website by browsing for the website yourself, don’t follow a link that has been provided via an email
- Only use the official bank app when mobile banking and keep the app updated for the strongest security protection to date
- It’s not recommended to access internet banking when connected to public wi-fi. If you do however, it’s a good idea to install a VPN for added protection to prevent potential hackers
- When choosing a password, the more complex it is the more secure your account. A combination of symbols and uppercase and lower-case letters will provide a layer of protection. It’s best to avoid using your name, username or the bank provider in the password
Compare current accounts
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