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11 Apr 2024
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.
Our free Scam Alert emails are put together by our expert journalists and can help you:
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.
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.
If you've been a victim of fraud, your bank or card provider should refund you immediately, unless it has evidence that:
Previous Which? Money investigations have shown that banks don't always get these decisions right.
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.
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.
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.
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%).
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.
It's important to keep an eye on your finances and contact your bank if you're suspicious.