One in five victims of identity fraud fail to get the full amount back, with some banks refusing to reimburse any of the money, according to the UK’s consumer watchdog.
New research from Which? reveals that a quarter of the British population has been a target of identity fraud and that out of those unlucky individuals some never get their money back.
The rules surrounding identity fraud, set out by the Banking Code, say that people who have their identity stolen should get their money back unless they acted fraudulently or without reasonable care. However, the consumer group said a “lack of guidance” means banks may be able to refuse refunds to people who have lost money on the grounds that they were negligent with the pin.
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 fraud claim because his pin number was used to withdraw the cash. It said he must have been negligent and when he appealed to the Financial Ombudsman Service it also turned down his case.
The chip and pin method of payment is the most secure but yet fraudsters are still finding ways to get around this. This year, between January-March 24,819 cases were recorded of ID fraud – a 38 per cent increase from the previous quarter. Between 2007-2008 over £600m was lost through fraud.
Experts from CIFAS, the fraud prevention service in the UK, point out that fraudsters have found more sophisticated and reliable ways of getting people’s details without them knowing anything about it.
More advanced techniques involve filming civilians entering their pins into cash machines known as ‘skimming’, calling up the target and pretending to be their personal bank account, ‘phishing’ using specialist computer software such as ‘Spyware’ which turns links into virus which rip open the security of the targets personal computer and steal all the information from it.
In April this year a number of online forums were found to be selling stolen identities from hundreds of fraudsters in Britain allowing people to purchase a single, random, personal identity for less that 50p.
Martyn Hocking, the editor of Which?, said: ”Identity fraud is inconvenient and stressful, and can also 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, but you can significantly reduce the risk of fraud if you’re vigilant.
”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 provide more detailed guidance on the evidence banks have to give in card fraud cases. It says it will be making representations to the FSA as it develops its new role in the coming months, ”ensuring that the process is both fair and fully transparent for consumers”.
