By Alison Steed
MyMoneyDiva.com
Internet banking users have reached the highest level yet in the UK, with 22m banking online to deal with their current accounts, according to data from the Payments Council, yet online bankers could be losing a staggering £439m a year in transactions that go astray because of a lack of protection.
More than half of the 41.5m internet users are now banking online as a main way of dealing with their current account. The most common uses are to check balances and check statements – around nine in 10 of us using online banking do so for these reasons – but an increasing number of us are undertaking online transactions.
But if something goes wrong with an online transaction, you could seriously struggle to get your money back, as currently it is one of the few areas which is not covered by any form of specific legislation to help those who make a mistake.
A major problem can occur simply by typing one wrong number of the bank account to which you are transferring money. This could represent – in our estimation – a staggering £439m to Brits which even the Financial Ombudsman is powerless to assist in retrieving.
There’s a good chance that your hard-earned cash will be gone for good if it lands in the account of a total stranger. An accidental transfer of £2,000 into the wrong account put one unfortunate bank worker in this very position last year.
The onus is on the person making the mistake to first contact their bank to request that the receiving bank contacts their customer asking them to return the money.
A bank may simply “request” that a payment made in error be refunded under current legislation. If the receiving bank chooses to deny permission or to ignore the request entirely, there is nothing your bank can do.
To add insult to injury, it’s very difficult for the person who made the errant transaction to take legal action against the receiving account holder to recover the money, as the Data Protection Act prohibits the bank from revealing customer details.
Without such details it would be impossible to take court action to retrieve the funds, as you wouldn’t know who to chase for the money. Legally you could ask a judge to rule that the banks give up personal details so that you could take action against an individual, but this would cost you more money. Not exactly ideal when you have already lost money because of a simple mistake in the first place.
As the law stands, a person could legitimately ‘steal’ your money and it would not be regarded as theft as it appeared in their account though no action of their own.
While you would hope that most people would do the right thing and give that money back, there is no guarantee – and having some extra cash appear out of nowhere while many people are struggling to make ends meet, is something that is likely to be hard to pass up.
We are working on trying to build a case for the law to be changed to offer more protection to online banking users, but for now, there are five top tips on what you can do to try to protect yourself:
1. Check, double check, and then triple check the account details you input. Ask another household member to check them with you if possible.
2. Ensure you have selected the correct name if choosing from a drop-down list – a banking favourite where mistakes can easily occur.
3. Once you realise you have made a mistake, get in touch with your bank as soon as possible – even if you have to send an email in the middle of the night. If there is a chance for them to stop the payment before it leaves your account then a thorny problem could be avoided.
4. If you have a significant amount of money to move you should perhaps consider telephone banking or banking in person, as using online banking for large amounts of money is risky. That way, if the bank teller puts the wrong account details in, you have some comeback. If using online banking is better for you, then be extremely careful. For security reasons some banks have a £10,000 limit on daily transfer amounts anyway.
5. For larger sums, consider doing a series of smaller transactions to avoid losing a lot of money if something does go wrong.
MyMoneyDiva.com would like to hear from anyone who has had problems along these lines. Please go to www.mymoneydiva.com/community and tell us about what happened.
Alison Steed is the editor of the personal finance website for women MyMoneyDiva.com.
