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Rights to refunds for unauthorised payments

If a criminal gets access to your bank or credit card details, you could see a lot of your money disappear.

No matter how careful you are to keep your identity and personal details safe and secure online and elsewhere, you may still have your bank details stolen or other personal details compromised through no fault of your own.

Bank compensation for unauthorised transactions

If someone has taken money from your account or used it to make an unauthorised transaction, the bank is legally required to compensate you for the money lost, unless they can prove that it was authorised by you or that you were at fault.

You can use one of our form letters to contact your bank if you have become a victim of an unauthorised credit card charge or an unauthorised cashpoint withdrawal.

How to get money refunded

If you notice that a transaction that you did not authorise has been carried out, you must notify your bank immediately. They can then take steps to ensure that no further money is taken – the bank is required to refund you for any unauthorised transactions that take place after you notify them, whether or not you acted negligently.

If you have any evidence to prove that you did not authorise the transaction, you should provide that too – for example, if money was taken from a cash machine, you could provide the bank with proof that you were somewhere else at the time of the transaction.

Unless the bank disputes whether or not you are entitled to a refund, they should refund the money immediately.

They should also refund any charges that you have incurred as a result – for example, if the transaction puts you into your overdraft, the bank should refund you any overdraft fees.

When can the bank refuse to refund?

The bank may refuse to give you a refund for any of the following reasons:

You did authorise the transaction

Simply enough, the bank thinks that you did authorise the transaction, and that you are not due a refund as a result. (Note that deliberately making a false unauthorised accusation claim will likely get you reported to the police for fraud.)

You left it too late to notify them

You must notify the bank of an unauthorised payment within 13 months of it taking place – tell them any later and you will not be entitled to any compensation.

You acted fraudulently or negligently

You did not take enough care to protect your account from being compromised, making it easier for someone to access your account. This could include failing to keep your online banking password or your PIN private, or having your card lost or stolen and not telling the bank quickly enough.

Bear in mind that the burden of proof is on the bank in this situation. They can’t force you to prove that the transaction was unauthorised; they can only refuse to refund you if they can prove it was your fault.

If you don’t agree with the bank

If you think the bank is wrong to refuse to reimburse you, you can escalate the claim through the bank’s internal complaints process.

If the bank still won’t budge, you can take your complaint to the Financial Ombudsman Service.

You can use the complaint form on their site, or call them on 0300 123 9 123 or 0800 023 4567.

You should ask your bank to provide you with a “deadlock letter” to clarify that you are at a stalemate – the ombudsman may require this before taking your case. If the bank sends this letter (or does not respond to the request within a couple of weeks) you should take your case to the FOS.

If the FOS decides that you shouldn’t be refunded, your last resort is to take the case to court. However, before taking the bank to court, you should consider that:

  1. the court is not necessarily any more likely to rule in your favour than the FOS
  2. even if you win, the refund you get might be wiped out by court and legal fees, and
  3. going to court is a pain, to say the least.

Unauthorised direct debit payments

If a direct debit payment has been made from your account in error, you are entitled to claim the money back from your bank under the Direct Debit Guarantee. If this has happened, contact your bank.

You can also claim a refund if the amount or frequency of a payment is changed without enough notice. For example, if you had a direct debit of £5 a month to an organisation, and the organisation increaseed the amount to £10 without warning you first, you are entitled to a refund.