Unfortunately, forged cheques and fraudulent withdrawals from bank accounts do take place from to time. We explain the circumstances in which you may get the money refunded.
Cash can only be taken out of your bank account if you have authorised it. A phantom cash withdrawal is a withdrawal from a cash machine (ATM) taken from a customer’s account, where the customer denies it made the withdrawal and they did not authorise it. However, the bank might not admit liability on the basis that it has not found any errors at its end.
The question is, if your bank statement shows a withdrawal from the cash machine or online which you never made, what is the legal situation? If an unauthorised withdrawal is made from your account, you can claim a refund from the bank. The bank must give you a refund without undue delay, and at the latest – by the end of the business day after the day on which it became aware of the problem. However, if the bank has reasonable grounds to suspect you have acted fraudulently or without reasonable care, it will refused a refund.
The Financial Services Authority (FSA) says that unless the bank can show you have acted fraudulently or without reasonable care, the most you will be liable for is £35. Situations in which the bank can deny liability on the basis that you have not acted with reasonable care to protect your card from misuse, include:
If you claim a refund, it is for the bank to prove that you authorised the payment, or that you were fraudulent or negligent in allowing the withdrawal. Note that if the bank can prove fraudulent activity, this will be passed to the police and a prosecution could follow.
You need to give the bank up to eight weeks in which to respond to your initial request for a refund. If you claim a refund but the bank refuses, you can then make a formal complaint to the Financial Ombudsman. If you not happy, your complaint will be investigated by a case handler at the Financial Ombudsman, and a fair, reasonable decision will be made. If you’re still not happy, you can take your complaint to the Chief Ombudsman.
If your bank statement reveals that a cheque which you did not write has been cashed, a fraud may have taken place. If the bank determines that the cheque was fraudulent, the bank will notify the police.
You need to tell the bank as early as possible that you did not write the cheque, although in theory, you have six years to bring it to the bank’s attention. The bank should then refund you the money. However, if you are found to have infringed the banks’ terms and conditions, you may be held liable. Your duties include ensuring that you write out a cheque in such as way that will not facilitate fraud or forgery. For instance, if you gave someone a signed but blank cheque to complete on your behalf, and your trust was abused; or you write out a cheque leaving a large space between digits making it easy for someone to insert a number, the bank may be able to resist liability.
You should write to your bank manager, explaining why you believe a forgery/fraud has taken place involving a cheque. Enclose a copy of your bank statement and ask for the value of the cheque to be credited to your account. If the bank refuses to do so because, for example, it says you were to blame, you can then make a complaint through the bank’s official procedures.
If you are still not satisfied with the outcome, you can make a formal complaint to the Financial Ombudsman Service.
Nicola is a dual qualified journalist and non-practising solicitor. She is a legal journalist, editor and author with more than 20 years' experience writing about the law.
When you submit your details, you'll be in safe hands. Our partners are National Accident Helpline (a brand of National Accident Law, a firm of personal injury solicitors regulated by the Solicitors Regulation Authority). They are the UK's leading personal injury service. Their friendly legal services advisers will call you to talk about your claim and give you free, no-obligation advice. National Accident Law may pay us a marketing fee for our services.
By submitting your personal data, you agree for your details to be sent to National Accident Law so they can contact you to discuss your claim.
If you win your case, your solicitor's success fee will be taken from the compensation you are awarded - up to a maximum of 25%. Your solicitor will discuss any fees before starting your case.
