Banks decide fraud claims based on ‘hunches’, says Which? report

computer keyboard with white keypads and one green button that says Fraud

Yesterday, PaymentEye covered a report that revealed even though three-quarters of Britons believe that banks branches will still exist in 2025, many said they also wanted to see serious improvements made on how they operate, including issues such as long queues and insufficient amount of expert advice.

Now it appears that there is another issue that can be added to that list.

Three in five Which? members have experienced bank fraud and the consumer group’s latest investigation shows banks can be inconsistent when it comes to handling fraud claims.

 

Inconsistent handling

The survey of 3,000 asked people about their experiences of card fraud and found that three in five (59 per cent) had experienced fraud, with 64 per cent of these having been targeted in the last two years.

 

Card security

There is positive news for cardholders as a quarter of cardholders lost nothing because the transactions were blocked. However, it should be pointed out that when money was taken, victims initially lost £624 on average for credit cards and £677 for debit cards.

Almost all victims got their money back eventually, and most banks reimbursed 64 per cent of card victims within a week. However, three out of ten people were kept waiting between one and four weeks. Just under 10 per cent had to wait even longer.

 

Decisions based on ‘hunch’

The most concerning information to come out of the report was the Financial Ombudsman Service assessment of how banks handle fraud claims. The FOS told Which? that whilst it’s seen some improvements, in many cases banks have based their decisions ‘on a hunch’, without conducting a full investigation.

The report found that around one in four complaints relating to fraud and disputed transactions are upheld in the customers’ favour. Barclays/Barclaycard were ordered to pay up in 56 per cent of cases whilst 47 per cent of Santander customers were wrongly denied compensation, compared with just 22 per cent for NatWest.

 

‘Fraud rates on the rise’

“With fraud rates on the rise, it’s encouraging to see the vast majority of victims got their money back. Banks have a duty to resolve cases of fraud quickly and can only delay a refund if there is suspicion of wrongdoing. If you’ve been denied a refund by your bank you should escalate your case to the Financial Ombudsman Service,” said Which? executive director Richard Lloyd.

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