Of the 1.5 million people targeted by credit card fraudsters in the last year, 10 per cent were denied refunds or compensation. Watchdog group The City claims that banks mistreat customers who have been defrauded by criminals in an effort to reduce the amount paid out in compensation to account holders.
Next week, the watchdog group will investigate whether credit card issuers have taken part in deliberate schemes to avoid reimbursing defrauded consumers for their losses. The group believes that tens of thousands of people were denied the refunds they were entitled to under the law after being targeted by fraudsters.
According to the Financial Conduct Authority, over 1.5 million people are affected by credit and debit card fraud each year. Most have cash stolen from their accounts via online hacking and cashpoint fraud, with losses running upwards of tens of millions of pounds per year across banks and credit card providers.
Banks are required to shoulder the charges when a credit card is hacked or violated at no fault of the account holder. The Financial Conduct Authority’s new review into bank and credit card issuer practices could help approximately 170,000 people per year, according to an FCA spokesperson.
University of Cambridge credit card fraud expert Ross Anderson claims that the FCA investigation is “long overdue”. He said: “I have cases going back seven or eight years of banks turning away genuine fraud victims with the response that ‘our technology is secure, therefore it’s your fault’.”
Mr Anderson believes that many bank anti-fraud employees mistakenly believe that the cards’ technology is secure because of their training. Under current laws, banks need to reimburse victims of credit card fraud unless they are considered “grossly negligent” of failing to take even basic precautions to protect their credit cards.
If the FCA investigation exposes institutional failures to protect consumers from credit card fraud, banks could be subject to fines.