Banking Online? Beware the Mouse!
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. Ninety per cent of us using online banking do so in order to check balances and statements, but increasingly we are also performing online transaction.
While convenient, if you make a mistake with an online transaction then you could struggle to get your money back as there is no current legislation in this specific area which can protect you.
A major problem can occur simply by typing one wrong number of the bank account to which you are transferring money. In our estimation, this could be costing Brits a staggering £439m – and not even the Financial Ombudsman can help you get the money back.
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.
A bank may simply “request” that a payment made in error be refunded under current legislation. If that permission is denied, or the request is ignored, there is nothing else the 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.
This, in turn, means you would not be able to take any court action against the individual, because you do not know who you would be chasing 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.
What this means is that a person on the receiving end of such a mistake could legally and legitimately ’steal’ your money – albeit technically not actually theft – as the means by which they came about it had nothing to do with them.
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. It’s a good idea to ask a partner or housemate to check them for you as well.
2. Take extra care when selecting a recipient via a drop-down menu – this is a favourite option on online banking sites and it is not difficult to click on the wrong name.
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. If there is a chance for them to stop the payment before it leaves your account then a thorny problem could be avoided.
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. You will at least have some comeback then if the bank teller inputs the wrong details. If you do decide that online banking is better for you, take extra care when carrying out your transaction. Many banks will have a limit on how much can be transferred in one day in any case – usually this is around £10,000.
5. Large sums of money would be better transferred as a series of smaller transaction in order to minimise losses if something does happen to 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.