Take Extra Care With Your Clicks

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. Most of us using online banking services do so simply to check statements and balances, but increasingly we are also carrying out transactions online too.

Current legislation in the specific area of online banking is lacking, which means that if you make a mistake during a transaction you could have a struggle trying to get your money back.

If you enter just one wrong digit in the bank account number of the transfer beneficiary you could be in for a serious problem. An estimated £439m of hard-earned cash could be lost to Brits who cannot even call on the Financial Ombudsman to help get the money back.

If your hard-earned cash goes to a stranger, then you may never see it again. One bank worker found herself in this very position last year, when she accidentally transferred £2,000 to the wrong bank account.

The onus is on the person making the mistake to first contact their bank to request that the receiving bank contacts their customer asking them to return the money.

But the current law only allows the bank to “request” that a mistaken transfer be refunded. 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. Technically a judge could rule that the banks reveal those details so you could take the matter up with a person – but this would be a costly route. 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.

As much as you would hope that the beneficiary of an unexpected amount of cash would be decent enough to give it straight back, they are not required to do so, and could come as a pleasant surprise to someone who may be struggling to pay the monthly bills.

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. Always check the account details you have entered at least twice, if not three times. It’s a good idea to ask a partner or housemate to check them for you as well.

2. Ensure you have selected the correct name if choosing from a drop-down list – a banking favourite where mistakes can easily occur.

3. Do not hesitate to contact the bank – even if this means sending an email in the middle of the night – the moment you realise a mistake has been made. 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. Consider using telephone banking or going into a branch of your bank if you have a large amount of money to transfer – using online banking for large amounts is risky. 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. You will probably find that your bank has a maximum limit for transfers of £10,000 or so each day for security reasons.

5. In order to minimise losses should something go wrong, think about transferring largers sums as a series of smaller transactions.

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.