Best banks for dealing with fraud

The fraud reimbursement lottery 

Fraud is the most common crime in England and Wales – accounting for around 40% of all offences – driven by widespread abuse of social media platforms and payment systems. 

If you fall victim to a scam, your first port of call is to contact your bank but Which? research has repeatedly shown that victims face a reimbursement lottery. 

Here we reveal the best and worst banks for fraud reimbursement and explain how to fight your case if you think you've been treated unfairly. 

What are the different types of fraud?

Broadly, fraud is described as either unauthorised or authorised. 

Card fraud accounts for the bulk of unauthorised fraud losses in the UK. The industry splits the data into these five categories, with remote purchase fraud the most common by some distance.

• Lost and stolen cards When a criminal uses a lost or stolen card to make a purchase (remotely or face-to-face) or withdraw funds from an ATM. Victims might be shoulder-surfed for their Pin or even tricked into handing their cards over to criminals pretending to be helping with a police enquiry (often referred to as a courier scam).
• Card ID theft When stolen or fake documents are used to open a new account in someone else's name (application fraud), or when a criminal takes over an existing account.
• Counterfeit card fraud When a fake card is created using stolen details from the magnetic strip on a genuine card. Crooks can use a cloned card in countries where chip and Pin isn't available, such as the US.
• Card not received fraud When a new or replacement card is stolen in transit before you receive it e.g. from a communal letterbox.

If a criminal gains access to your bank account (through internet banking, telephone banking, or mobile banking) and makes an unauthorised transfer this is referred to as 'remote banking fraud'. Both cases and losses to this type of fraud fell in 2022, according to industry figures.

Authorised push payment (APP) fraud – where victims are tricked into sending money to a scammer by bank transfer – is ruthless and has grown quickly. As with card fraud, there are many different types of APP fraud.

• Impersonation scams Fraudsters posing as the police, your bank or other familiar firms to request bank transfers to accounts they control.
• Purchase scams Goods, eg those advertised on social media sites, that never arrive.
• Investment scams Fictitious funds or fake investments.
• Romance scams Maliciously targeting you via social media or dating websites and asking for money.
• Advance fee scams Criminals pretending payment will lead to a windfall e.g. lottery win or inheritance.
• Invoice and mandate scams Sending fake invoices claiming to be someone you are expecting to pay, such as a builder or solicitor.
• CEO fraud Impersonation of high-ranking officials from a business to request money.

Fraud: how do I get my money back?

If you've been a victim of fraud, your bank or card provider should refund you immediately, unless it has evidence that:

• You authorised the transactions yourself - and the bank can demonstrate this, though you should still ask for a refund, citing the voluntary code for authorised bank transfer scams if your bank is signed up. 
• You acted fraudulently or negligently - the burden of proof is on the bank to show that you deliberately or with 'gross negligence' failed to protect your card and/or Pin.
• You left it too late - the regulations state that you must inform your provider of unauthorised payments without 'undue delay' and, in any case, within 13 months.

Previous Which? Money investigations have shown that banks don't always get these decisions right.

Debit cards

For unauthorised use of your debit card, the new Payment Services Regulations state that the most you should have to pay is the first £35 (previously £50) of an unauthorised transaction if the bank has reason to believe you should've been aware that your payment details were lost or stolen.

Your bank can only refuse to refund you if it has evidence that you acted fraudulently, or with 'gross negligence' (a significant degree of carelessness). 

Your bank can't say that use of your password or Pin proves that you authorised a payment, although victims have told us this continues to happen.

Credit cards, credit facilities and overdrafts

If the unauthorised fraud occurs on a credit card or a credit facility, the Consumer Credit Act takes precedence.

The issue of 'gross negligence' doesn't arise in this act so unless your card provider can demonstrate that you authorised the payment, you should get your money back.

Importantly, this means that if an unauthorised payment was from an overdrawn current account (a credit facility for the purposes of the law), you can only be held responsible for the first £35 and should be refunded the rest of the overdrawn balance, including any charges incurred as a result.

Bank transfers

It can be difficult to get a refund when you authorise a bank transfer, because banks are legally required to follow your instructions. However, all financial firms must take steps to protect customers from fraud. 

The biggest banks are signed up to a voluntary Code for bank transfer scams, which provides a reimbursement fund for blameless victims and is taken into account by the Financial Ombudsman where complaints are referred to its service.

This will be replaced with a mandatory scheme in 2024, following a successful Which? campaign. We expect to see many more victims being reimbursed once this is in place, however, we have raised concerns about the latest proposals for the new rules. 

• Take action: a step-by-step guide on what to do if you're a victim of APP fraud.

Best banks for fraud refunds

Data from the Payment Systems Regulator (PSR) ranks the 14 biggest UK banking groups according to how much money they returned to victims of APP fraud in 2022.

TSB reimbursed 91% of APP fraud losses reported to it, followed by Nationwide which returned 78% of losses to customers. The worst banks for reimbursing APP losses were AIB Group (10%), Danske Bank (20%) and Monzo (22%).

What if the bank refuses to refund me?

If you think your bank or card provider has denied you reimbursement, or treated you unfairly in another way, lodge a formal complaint.

Within 15 business days, you must receive a full response to your complaint. Firms can extend this to 35 business days in exceptional circumstances, but they must send a holding letter in the meantime.

If you're unhappy with its response, take your case to the Financial Ombudsman Service (FOS). If the FOS agrees with you, it will uphold your complaint and can order the provider to refund you.

The FOS will look at complaints related to disputed transactions for all FCA-regulated financial firms, including PayPal and store card providers such as NewDay.

If an investigator finds in your favour, your bank or card provider will be asked to refund the loss along with appropriate interest from the date of the disputed transaction.

• Find out more: how to take your complaint to the Financial Ombudsman Service.

How can I spot and stop fraud?

It's important to keep an eye on your finances and contact your bank if you're suspicious.