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.
One small typo when transferring money to another bank account could land you with a serious problem. As much as £439m could have been “lost” to Britons alone in this way, and the Financial Ombudsman cannot even be called upon to help.
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. One bank worker found herself in this very position last year, when she accidentally transferred £2,000 to the wrong bank account.
If a mistaken transfer is being processed already, the person who made the error must first contact their bank who can then only request that the receiving bank contacts the beneficiary of the funds to ask that they be returned.
But under the current legislation, the only thing the bank can do is ‘request’ permission to retrieve the mistaken payment from its customer’s account. If the receiving bank chooses to deny permission or to ignore the request entirely, there is nothing your bank can do.
The Data Protection Act prohibits the bank from revealing customer details, which means that it can be extremely difficult for the person who made the mistake to take legal action for the recovery of the money.
In turn this makes it impossible to chase any individual for the money as you wouldn’t know who to take court action against. You could ask a judge to rule that the banks have to divulge the details so you can pursue the person, but this will cost you more money. Obviously this is not exactly an attractive option, having already lost money from the initial mistake.
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.
Most people – you would hope – when faced with an unexpected amount of extra cash in their account, would do the right thing and give it back, yet there is no guarantee and it could represent just too tempting a bonus for someone battling to make ends meet.
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. Take a few extra moments to check again that the details you have entered are correct. 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. If you do realise that you’ve made a mistake do not wait until the bank opens to report it – send an email in the middle of the night if necessary. The sooner you let them know, the better the chances are that the payment can be stopped before it leaves your account, and that is the easiest way of unpicking this thorny problem.
4. Avoid using online banking to transfer large amounts of money – this is risky and you should consider visiting a branch in person or using telephone banking for such a transaction. That way, if the bank teller puts the wrong account details in, you have some comeback. If you do decide that online banking is better for you, take extra care when carrying out your transaction. You will probably find that your bank has a maximum limit for transfers of £10,000 or so each day for security reasons.
5. If transferring a large sum, think about doing this as a series of smaller amounts to protect yourself if something should 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.
