Bank fraud is a growing problem in the UK, with scammers using advanced tactics to trick people and steal money. From phishing emails and fake phone calls to card skimming and identity theft, fraudsters are always finding new ways to target individuals and banks. According to UK Finance, over £570 million was lost to payment fraud in the UK in the first half of 2024 alone.
But when fraud happens, who is responsible for the financial loss? Should banks refund victims, or is it up to customers to protect themselves? This article explains the roles of banks, customers, and regulators in preventing and handling fraud.
The Bank’s Responsibility in Preventing Fraud
Banks play a crucial role in stopping fraud, detecting suspicious activity, and compensating victims. They must follow strict security rules, educate customers about scams, and use legal frameworks to protect people from unauthorised transactions.
Bank Security Measures
Banks provide secure systems that keep customers’ personal and financial data safe. Key anti-fraud measures include:
- Encryption and secure banking platforms – Protects data from hackers.
- Two-factor authentication (2FA) – Adds an extra step to verify your identity.
- Fraud detection and monitoring systems – Spots unusual activity.
- Automated alerts for suspicious transactions – Warns you about potential fraud.
These protections help stop fraud before major losses occur. But what happens if these protections fail? Who is responsible for bank fraud in that case? Banks are expected to safeguard their clients’ funds, but determining liability often depends on whether the fraud was caused by a bank’s security failure or customer error.
Fraud Prevention and Customer Education
Alongside using advanced technology to spot scams before they are allowed to happen, banks also have a duty to educate customers about fraud risks. They use emails, text alerts, and online resources to keep you informed about common scams like phishing emails and fake phone calls.
Read our detailed articles on Santander, Barclays, Lloyds, Revolut, and Monzo to better understand scams targeting major UK banks.
Do Banks Refund Money If Scammed?
Under the Payment Services Regulations 2017, banks must refund customers for unauthorised transactions—unless the customer acted carelessly. This law ensures fraud victims are not left without support.
However, in cases of authorised push payment (APP) fraud—where scammers trick people into willingly transferring money—refunds are not always guaranteed. If a bank unfairly denies a refund, the Financial Ombudsman Service can step in to help.
The Role of Regulatory Bodies in Bank Fraud
Government agencies and regulatory bodies help keep fraud in check by enforcing security rules and protecting consumers.
Government and Regulatory Oversight:
Regulatory bodies like the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) set rules for banks to follow in fighting fraud. They enforce strict compliance to ensure banks maintain effective anti-fraud measures.
Legal Framework and Consumer Protection:
The UK’s legal framework, such as the Payment Services Regulations 2017, mandates that banks reimburse customers for fraudulent transactions if proper security measures are in place. Regulators also work to ensure that fraud is reported promptly and that banks take appropriate action to stop further criminal activity.
Role of Action Fraud:
Action Fraud, the UK’s national fraud reporting centre, works with the police and other authorities to investigate scams. Victims of bank fraud are encouraged to report incidents to help track down fraudsters.
How to Protect Yourself From Bank Fraud
Staying informed about fraud trends is essential for protecting your money. Read our expert guide on fraud trends in 2024 and how to stay safe.
Use Strong, Unique Passwords:
Create long, complex passwords that are unique to each account. Avoid using easily guessable details like birthdays or common words. Consider using a password manager.
Enable Two-Factor Authentication (2FA):
Adding an extra verification step makes it harder for fraudsters to access your accounts.
Be Cautious with Unsolicited Communications:
Scammers often impersonate legitimate institutions. Be careful when you receive unexpected emails, texts, or phone calls asking for personal information.
Verify Communications:
Always double-check any message asking for sensitive details by contacting your bank directly using their official contact information.
What to Do If You’ve Been Scammed
If you have fallen victim to fraud, acting quickly can minimise the damage. Follow these steps to protect yourself and recover lost funds:
Contact Your Bank Immediately:
Report the fraud to your bank as soon as possible to block further unauthorised transactions and secure your accounts.
Secure Your Accounts:
Change your online banking passwords, security questions, and PINs to prevent further unauthorised access.
Report the Scam to Action Fraud:
Report the scam to Action Fraud so that authorities can investigate and track fraudulent activity.
Notify the National Cyber Security Centre (NCSC):
Inform the NCSC if the fraud involved a cyber attack or compromised your online security.
Monitor Your Accounts Regularly:
Keep an eye on your bank account statements for any suspicious activity and report it immediately.
Seek Legal Action if Necessary:
If you struggle to recover lost funds, seek legal advice from experts like CEL Solicitors.
For example, Oliver, a 78-year-old retiree, was targeted by two sophisticated scams that cost him over £126,000. After contacting CEL Solicitors, he was able to recover his money along with additional interest.
Conclusion
Preventing and handling bank fraud is a shared responsibility. Banks must provide secure systems, educate customers, and refund unauthorised transactions when appropriate. Customers need to protect their personal information and stay alert to scams, while regulators ensure that banks and payment services comply with fraud prevention laws.
By understanding the responsibilities of each party, you can take proactive steps to safeguard your finances and act quickly if fraud occurs.
Have You Fallen Victim to Bank Fraud?
CEL Solicitors can help. Our experienced team offers expert legal advice and support in recovering lost funds from scams. Contact your bank first, then reach out to us for legal assistance.
Call us on 0330 822 3752 or fill out our easy-to-use contact form.
