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. 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.

But if something goes wrong with an online transaction, you could seriously struggle to get your money back, as currently it is one of the few areas which is not covered by any form of specific legislation to help those who make a mistake.

If you enter just one wrong digit in the bank account number of the transfer beneficiary you could be in for a serious problem. This could represent – in our estimation – a staggering £439m to Brits which even the Financial Ombudsman is powerless to assist in retrieving.

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. An accidental transfer of £2,000 into the wrong account put one unfortunate bank worker in this very position last year.

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.

As is it wasn’t enough to have made the mistake in the first place, the Data Protection Act makes it hard for the person who made the error to get the money back, as the bank is not allowed to reveal customer details.

Without such details it would be impossible to take court action to retrieve the funds, as you wouldn’t know who to chase 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. Obviously this is not exactly an attractive option, having already lost money from the initial mistake.

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.

It would be lovely to believe that the majority of people would be honest enough to return the extra money immediately – however, the reality is that in this economic climate an unexpected deposit into your bank account could be just too tempting to pass up on for many.

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. Check, double check, and then triple check the account details you input. If there is someone else in the house while you are doing the transaction, get them to check them too.

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

3. Once you realise you have made a mistake, get in touch with your bank as soon as possible – even if you have to send an email in the middle of the night. The easiest way to solve the problem is to try and let the bank know before the money has actually left your account.

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. That way, if the bank teller puts the wrong account details in, you have some comeback. If using online banking is better for you, then be extremely careful. Some banks will not allow you to transfer more than £10,000 in one day online anyway for security reasons.

5. For larger sums, consider doing a series of smaller transactions to avoid losing a lot of money if something does 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.