Banks refusing valid card fraud claimsWhich? members successfully challenged banks

21 December 2007

Withdrawing cash from a cashpoint

Some banks are ducking out of paying legitimate card fraud claims by ignoring guidance in their code of practice, Which? can reveal.

Over the past year, several Which? readers with legitimate claims have seen their refund requests initially dismissed.

Which? member Hazel Harris had her Barclays debit card cloned. The copy was then used while Hazel was at a wedding.

Banking Code

Meanwhile, Valerie Delpech’s HSBC account was debited despite a cashpoint malfunction that meant she never received any money.

Under the Banking Code, you're protected from losses incurred as a result of card fraud unless it can be proved you ‘acted fraudulently or without reasonable care’.

We told Hazel and Valerie to challenge their bank, quoting the relevant clause in the Banking Code. Both banks subsequently paid up.

Shoulder surfer

Another member, Duncan Stephenson from Lewes, lodged a claim after £497.61 was taken from his account by a ‘shoulder surfer’ – a thief who spies on people while they enter their Pin and then steals their card.

Nationwide rejected Duncan’s claim, saying it ‘suspected that reasonable care was not taken’ until Which? challenged it, again using the Banking Code.

A spokeswoman said: ‘On reviewing the case, we have now decided to uphold Mr Stephenson’s claim. We have apologised for any inconvenience. We have also made changes to our procedures as a result.’

Duncan said: ‘I felt that Nationwide implied I was trying to defraud the bank, so I’m delighted with the outcome.’

Card fraud

Financial Ombudsman Service spokesman David Cresswell said: ‘We’ve seen 2,700 card disputes this year, 29 per cent up on the previous 12 months. It’s a growing problem.’

Sandra Quinn of Apacs, the UK card payments association, said: ‘The burden of proof still lies with the banks to prove a customer has acted negligently.’

If you're a victim of fraud and you haven't been negligent, quote clause 12.12 of the Banking Code when you claim a refund.

If your bank rejects the claim, contact the Financial Ombudsman Service.