UK banks refuse to refund card fraud

Evidence is emerging from bank customers that certain UK banks (they will remain nameless for now) are refusing to refund bank fraud. Under UK banking regulation the banks are insured for any fraud loss so in the past they have refunded customers accounts where fraud has occurred. Well this is about to change.

We’ve been highlighting for some time now that banks will be looking into ways in which they can increase their revenue – one way is to find all sorts of reasons for not paying up when a fraud occurs. Another way, which we believe will be here very soon is the end of FREE banking. Unlike the US (where you pay to have a bank account) UK customers have been very lucky – we’ve had free banking – but this is about to change.

Additionally what you will see is the advent of ‘identity fraud insurance’ on banking accounts. Don’t take out this insurance and you end up being a victim of fraud, you’ll find it impossible to claim back the lost funds. There are several reasons for introducing an ‘identity fraud insurance’. These would cover such things as: ATM (cash machine) transactions, debit cards, cheques, online and telephone banking and of course administration of your banking account. Who would argue with paying for this level of protection?

Which smoothly leads me on to why the banks will not want to refund your fraud losses at the moment. Of course the banks (not just here in the UK) have been badly hit by the economic downturn, so expect them to become more aggressive over the coming months – attempting to claw back lost revenues through – reducing overdrafts (asking for the money back!); refusing to refund fraudulent transactions and renegotiating credit agreements and mortgage rates.

There are many cases where we have found people have been unable to prove that it is not them that has withdrawn money from their bank account. In this case you’d find the banks are less likely to refund you. Once the Chip and Pin is used (regardless of whether it is used fraudulently) banks will try to refuse any refund.

Now to my last points – the most important!

Do NOT use your debit card (which is always linked to your bank). You are better off using a credit card (which will provide you with automatic protection under the UK Credit Consumer Act 1974, if you spend more than £50).

If you are unable to get a credit card ,why not consider a prepaid card – this will provide you with the same protection (but firstly check the Terms and Conditions – small print to you and me and make sure you are protected from fraud).

Safe surfing folks!


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3 Responses to UK banks refuse to refund card fraud

  1. jeromine says:

    Hi Nice Blog .This phone time card is used to track the time and attendance of employees, and at the same time track labor activity against specific parts, jobs, and operations.

  2. wandering soul says:

    Hi…This blog is really informative and easy to understand…will def follow it…:)

    just a little clarification… you mentioned 'Under UK banking regulation the banks are insured for any fraud loss so in the past they have refunded customers accounts where fraud has occurred.' now I tried searching for this piece of information but could not find it… where exactly is is mentioned that banks are protected from fraud losses? It would be real helpful if you could elaborate…. thanks…

  3. Julian says:

    Hi wandering soul, Apologies about not coming back sooner – been very mad in our office the past few weeks ! Really pleased you find the blog informative – we are making some subtle changes to the blog and our website in due course, so keep an eye open. Now to to your question – A typical example of how banks protect themselves: banks protect themselves against chargebacks and the merchant agreement by retaining customer payments for around a month before crediting a customers account (this in effect allows the bank to transfer liability for these payments of chargebacks to you.) In some instances, the banks are retaining the payments from the customer for a specific time period before crediting the customer account with the lost funds. Julian

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