One in five victims of identity fraud fails to recoup all of the money lost, with some banks refusing to make any reimbursement, according to Which?

New research from the consumer watchdog found that a quarter of the UK population has been a target of identity fraud. But while Banking Code rules state that victims should get their money back unless they “acted fraudulently or without reasonable care”, Which? said a lack of guidance meant banks refused refunds on the grounds that victims were careless.

One Which? member, Iain Richardson, had more than £2,000 removed from his account within 20 minutes of having his debit card stolen. But his bank turned down his claim because his pin number was used to withdraw the cash.

The chip and pin method of payment is meant to be the most secure, but fraud at cash machines increased by 31 per cent between 2007 and 2008, and more than £600m was lost through card fraud last year.

Martyn Hocking, editor of Which?, said: “Identity fraud can be costly if you’re unable to recover your losses. Fraudsters can be extremely clever and may need just a few details to access your accounts.

“Most of us know that we should not write down our pin, but we should also shred bank statements, be cautious about the passwords we use and think twice before posting personal details online.”

Which? is calling on the Financial Services Authority to give guidance on the evidence that banks have to provide in fraud cases.