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Barclays and Santander are the banks most likely to wrongly refuse to refund customers if they are victims of fraud, an investigation has revealed.
Banks are liable to reimburse unauthorised transactions if the customer reports it within 13 months and was not deemed to be negligent with their account details, or debit or credit card.
Customers who are refused a refund can take their complaint to the Financial Ombudsman Service, the resolution service, which will investigate if the bank is being fair.
An investigation by Which?, the consumer lobby group, found that between April 2015 and February 2017 Barclays wrongly rejected 36pc of customers who disputed transactions on their accounts. These complaints were upheld when taken to the Ombudsman.
The worst banks at refunding disputed transations
Which? looked at banks that had more than 100 disputed transaction cases.
Santander wrongly denied 33pc of customers compensation. Nationwide, RBS and NatWest refused to reimburse almost a third of customers who were victims of fraud, which the Ombudsman later decided was unfair.
Card fraud on the rise
The number of people cancelling debit and credit cards because of fraudulent activity has risen by 1m in the past year, from to 5.5m. The average amount lost has increased from £475 to £600, according to comparethemarket.com, the comparison site.
Consumers who have money stolen from their debit or credit card may be liable for the first £50 of any money taken from the account before the card is reported lost or stolen.
Once the unauthorised transaction is reported to the card provider customers are not liable for any more fraudulent payments unless it can be proved they acted negligently. If the bank believes you've been negligent with your Pin or card you could be liable for all costs.
Can the Ombudsman help with bank transfer fraud?
A bank is not liable to refund victims who have been tricked into making payments to criminals posing as trusted parties, such as solicitors, financial advisers and sellers on eBay or other websites. Providers will claim the payment was authorised.
Telegraph Money is campaigning for banks to take more responsibility to protect its customers from bank transfer fraud.
In the super-complaint made by Which? to the Payment Systems Regulator, which looks after the payments industry, it suggested that if banks were forced to compensate victims of bank transfer fraud, they would invest more in their systems that detected the fraud in the first place.
Those who are tricked into making payments to criminals can take their case to the Ombudsman to try and get their money back. However, its powers are limited.
The Ombudsman can investigate the banks' processes in relation to the fraudulent payment, but it cannot look at broader procedures, such as how accounts are opened.
Because of its restrictions, Telegraph Money has only seen a few occasions when the Ombudsman rules in favour of victims of bank transfer fraud.
One reader, David Burton, spent two years trying to get back £3,400 that he paid to a fake eBay seller for a non-existent motorhome.
The Ombudsman said TSB, the fraudster's bank, could not be blamed. This was still the case when Mr Burton later submitted police evidence that revealed the bank had allowed the account to be opened using fake details.
After pressure from this newspaper, TSB finally admitted fault in a landmark case and refunded Mr Burton the stolen funds.
However, another victim Ann Green had more success with the Ombudsman, which forced Barclays to pay her back more than £14,000 she had transferred to a fraudster posing as her financial adviser.
The Ombudsman discovered Barclays did not block the fraudsters account when Ms Green reported the crime and allowed the criminal to steal her money. It was ordered to reimburse her and pay compensation and interest.
Has your bank refused to reimburse funds taken fraudulently? Email amelia.murray@telegraph.co.uk
