Banks gone too far on online fraud?

21 June 2009

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A few weeks ago, I made an online credit card purchase. The transaction took place in Gibraltar, where the website is run (and no, it was not porn). While this was a small transaction of under £5, within minutes my bank called to inform me that the card has been temporarily blocked.

I was left with what was akin to a limited paypal account. Just with some actual existant customer service.

But when it comes to stopping bank fraud, are UK banks throwing out the baby with the bathwater? At what point does bank vigilance begin to seriously crimp consumer spending?

There is much to be said for hypervigilant banks taking the initiative and trying to stop fraud when they can. You can't blame them: online bank fraud accounted for £52.5 million in 2008, and "card-not-present" fraud totalled £328.4 million last year. This accounts for more than half of card fraud crimes in the UK.

So should I feel relieved rather than annoyed that they confirmed the transaction with me? The banks have to walk a fine line: they have to be vigilant enough to halt fraud where they can and yet allow customers access to their own money. The online threat of fraud is very real. Since 2006, the Sinowal trojan (also known as Torpig and Mebroot) has compromised 270,000 bank accounts and 240,000 credit and debit cards from financial institutions in the UK, US, Australia, and Poland. Interestingly, no accounts from Russia were compromised. I wonder why.

Have you been pleasantly surprised by your bank checking on transactions you've made, or frustrated and annoyed by them blocking your cards / accounts for utterly ridiculous reasons, making it complex for you to lift the block? Do you consider it a necessary intrusion, or do you think they're going too far and putting the brakes on legitimate credit card spending?

Let's hear your thoughts!

TOPICS:   Credit Cards   High Street News

37 comments

  • Theo C.
    My Bank has a fraud detection team which, apparently, does routine checks on customer accounts. I was recently left unable to process any online transactions through my current account for a few days. Not because any fraud was detected, but because the fraud detection operative failed to log out of my account correctly leaving it locked. The messages I got from their website were indistinguishable from the standard "system error" messages. It was only after a few attempts that I concluded enough was enough and phoned them to find out what was the problem. My objection then was being treated like a fraudster in their initial line of questions until they found the reason for the fault and even then they weren't exactly effusive in their apologies.
  • Alan
    Similar happened to me recently.... Went to pay for an item in Tesco using my Alliance Leicester debit card only to be told the bank had declined the transation, knowing I had funds available I went to the whole in the wall to be informed "tranasction declined please contact card issuer" I phoned A&L as soon as I got home to be told my card had been cancelled, no discussion, due to a 25p transaction from a fraudulant source, on asking for more information they explained that the fraud department would be in touch and that a new card would be with me in 7-10 days, gutted.... While im happy the bank was so vigilant was it really necessary to cancel the card without any discussion with me......Its the first time anything like this has happened to me and luckily I had access to other money but can you imagine if I were away from home or had no other money available.
  • Sam
    My Partner has had a few problems before with Barclays. He tries to pay for his barclay credit card with his barclay debit card and they decline the transaction nearly every single time.... its so funny and they dont care.
  • WBRacing
    My brothers account was hacked recently and they tried to move several thousands of pounds. The back locked the account checked and thus a mightmare was avoided. If the bank proves, or even suspects negligence towards your banking security they are under no obligation to refund the money. A court case was lost by someone recently when they tried to take on a bank to prove otherwise, insult onto injury as the court fees were in excess of £60k. It's a VERY serious business as I certainly could live at the moment if someone took my savings and with a global credit crunch it is only going to be on the increase. If my monies safety means from time to time I will be inconvenienced, so be it.
  • Richard
    I recently used my Halifax Debit card at Dublin airport to withdraw Euros from an ATM, then drove to Belfast, put petrol in car and found my card was blocked, on calling the Halifax I was advised it was because I had used the card in 2 countries (Republic of Ireland and Northern Ireland) on the same day a couple of hours apart. you would have though the system would have realised they are linked! Also had problems trying to use card in Las Vegas when wife had used linked card in UK on the same day, they only see it as a single card and rejected as used in multiple countries on same day, But on the bright side it saves having to make claims when some scumbag does get into yuor account
  • me
    i had £50 taken from my account for a vodafone top up a few days after using it in a cash point that had obviously been jacked up (irritating as it was one in clear view of the highstreet and on the side of the bank so youd assume wouldnt be targeted!). Went straight to HSBC, they made me call this number whilst in the bank and I got the £50 back within a week. So pretty happy there. BUT - after ordering my netbook from dixons back in January, despite the fact I had funds my card wasnt working on any websites. Phone them up and was made to confirm my last 5 or so transactions and a few other details. Not so happy there - If i want to spend £280 I damn well can without being given the 3rd degree! So I suppose its a game of winning some and loosing others, its certainly better than loosing them all...
  • CompactDstrxion
    Spotted my credit card had been used fraudulently on Amazon for about £50 recently, bank refunded within a week after sending some forms back. I suppose one of the reasons they'd use it there would be they don't operate MasterCard SecureCode.
  • Gus
    I am very careful using my details on line and some scumbag got my credit card details and spent 74 quid on www.clickandbuy.com. Luckily my bank cancelled my card as on the next day there as an over 300 quid transaction which was denied.
  • Graham
    Yeah Amazon would rather pay fines to their merchant bank rather than implement securecode. They think less people will use them because its extra clicks/hey presses to pay.
  • CompactDstrxion
    Well I used to work in a major bank's call centre helping a lot with SecureCode enquiries. A lot of people were confusing it with their Internet Banking password, and a lot of people didn't know why it was useful. Once they understood the reason for the system they appreciated it a lot. I think the banks should do more to promote SecureCode (and Verified by Visa which is Visa's equivalent system) because if websites don't use it then purchases can be made using information that is written on the card.
  • Delta
    Royal Bank of Scotland have now implemented a stupid card reader system for phone and online banking. If you are out and about and want to make a payment using online banking, you cant! Need to call up to ask about your account? You cant! If you don't have the card reader on you then you are SOL! May not be a problem for women with handbags but as a guy where do they expect me to keep a card reader at all times? If RBS are that worried about online fraud why don't they just get rid of online and phone banking? They may as well... it is useless to me now!
  • PJR
    Of course, the card reader in all likelihood is only supported on Windows systems. Covers most but not all people. (e.g. macs, linux, consoles like the ps3... Not everyone uses windows or wants to buy a licence and machine just for internet banking)
  • Delta
    It is not even that high tech, it is just an algorithm in a box. No PC required.
  • Gareth
    I had £450 spent on www.link.com on Friday morning without my knowledge. My card details must have been stolen - but no idea where from. Barclays have been less than helpful so far - police have been really good. Hopefully Barclays will sort themselves out and start investigating it so I can get my money back as I am now £200 overdrawn and can't access my online account to transfer money until I have a new card. I would rather a few days inconvenience than being in this position again.
  • Alistair
    Last week my capital one mastercard was subject to around 800 quid of online fraud. Glad to say they picked up on the transactions & caled me to verify. Unfortunately, i didn't get their call so it was later in the evening when I checked my account online that i noticed a severe drop in my available credit limit. After my call they blocked the card & am now waiting on a new.
  • Paul
    I like the fact they are trying to look after us its just sometimes blocking your card can be so annoying. I bought a TV from play in the sale (limited stock) as far as I was concerned the transaction went through. Got a phone call saying my card had been blocked because it was near to Christmas and there is usually a lot fraud at that time of the year. Checked with Play and because the transaction never went through I never got my TV :(
  • alex
    At the end of the day they run anti-money laundering and fraud detection s/w so prevent our money going walkies. I'd rather the bank have correct controls in place than lose my money because they don't have the correct monitoring going on. The risk lies with us losing our money, so thanks banks for implementing these systems.
  • Stevie
    banks are a joke thursday they stopped a £5 transaction from amazon even though i always shop there sat they let £2300 in fraud through (cotton traders got hacked and my data taken) even though my bank knew this they did the sums and worked out it was cheaper to take a chance instead of replacing 60000 cards
  • John
    I would much rather the companies be over cautious especially now as fraud seems to be so common, Egg recently phoned me to say there was a suspicious transaction on my account and to phone them back to go through their security procedures (they didn't give me a number, told me to use my card). I phoned them back and sure enough someone had tried to put 35 pounds for poker on my card, they cancelled it and sent me out a new card which arrived the next day. I would be a lot happier if a company blocked my card in error if it meant they were more likely to catch any fraud on it. John
  • gun
    I was told before you go abroad with your credit card ALWAYS tell the issuing bank where you are going and that any transactions made back in the uk during that time are likely to be fraudulant and any transactions made abroad in the country of your visit are likely to be OK Gun
  • Boon
    I have a Visa debit and a Visa credit card from First Direct. This weekend, I tried to book tickets for a movie at Vue Cinemas online, and tried my credit card. The card was declined for what was essentially just a £12.50 transaction. What is weird is that I'm pretty sure Vue isn't a target for online credit card fraud - criminals probably aren't interested in skimming cards to watch Transformers 2, cinema tickets have very low (if any) resale value, and plus to collect the tickets you need to insert the physical card into the collection machines. This problem with my First Direct Visa card and Vue has happened twice now over the space of a couple of months. What was interesting was that I tried my Visa Debit card, issued by the same bank, to buy the tickets and they worked! So does that mean that First Direct's fraud protection system only protects credit cards but not debit cards? and surely lots of First Direct customers in the UK are purchasing Vue cinema tickets with their credit cards... are they having to employ call centre workers to call up every single customer trying to buy cinema tickets online?
  • The E.
    re Gun's comment...Yeah i've heard u gotta do that too...but...like announcing ur holiday on facebook / twatter etc or having the taxi pick u and family up from home to go to the airport / ur hols...isn't this rather unsafe too ?...as the bankers then know u r abroad etc...all it takes is an unscrupulous employee on the other end etc...i'm too sceptical i know...but...guilty till proven innocent is my motto...not vice versa as is commonly the perception !?!
  • John
    An unscrupulous employee can take advantage of your account anytime so I don't really see what difference it makes, personally I do make my card issuers aware of the dates I'm away to reduce the chance of problems. John
  • ANTONY W.
    Why have "card not present" transactions t all. Just put a card slot on every PC, plug in your card and bingo "card Present"??? Get to it PC makers.
  • rich
    Far from the bank spotting some online fraud when my dads card details fell into the hands of some organized crime group as a result of a keylogger, the fraud was only flagged up to him when the companies wrote letters to him asking why he was using a different name and delivery address to order some goods and to confirm this was correct! After he'd informed the bank and cancelled the card he received a number of further calls asking if he had made subsequent purchases in person in a new york book store, shop in Amsterdam etc. Quite how they expected him to travel so quickly from place to place I don't know or why he'd continue trying to shop so extravagantly after cancelling his cards! While I won't reveal the identity of the bank in question, suffice to say we won't be ranking it highly in any 'gallop' polls!
  • -> H.
    Please remember, the banks don't give a shit about you, they hate you, they are not protecting you, they are protecting their money.
  • Mick T.
    Capital one have rung me a few times to confirm online transactions before taking action. One time a particular transaction was a fraud attempt (they said it was a huge number of transactions they had seen that were to popular online retailers by fraudsters using card number generators). The cancelled my card and issued me a new one, took about 5 days in all. Fortunately I have another credit card so wasn't inconvenienced by this. Overall I rate them quite highly.
  • Chris
    @Boon: have you been with FD for long? I know when I first was with FD, my Maestro debit card kept on getting blocked left right and centre. But after a while, the blocks became less frequent as they learnt my spending pattern, the only other thing that was required was a voice authorisation every so often.
  • Mitov
    My credit card companies are great... although when they are suspecious, they have never declined a purchased... they usualy call me to confirm before they put it though... i think this is great. They have stoped my credit card several times from fraud, and i am happy. Bank with Tesco, Virgin and HSBC.
  • Hensley S.
    My ETRADE account in US was blocked and they treated me as a criminal. First asking date of birth, whether I love or hate marmite, penis size etc. Then telling me I had to prove who I was by faxing my passport page (secure eh?). Did this, they claimed it never arived. Faxed again. They said they needed a letter too. Faxed again. Not good enough quality. Sent by overnight mail. Not received. Sent by overnight mail again. "Not in order" but couldn't tell me why. Sent again. Not good enough, needed to be notarized. £60 notary fee and another letter. Ah, now they are talking to me but again need to know my sexual preference, country of birth, last time I ate an avocado, time, place and amount of last 10 transactions etc. Only then do they tell me I have been accessing my account from both UK and Atlanta frequenly, even on the same day. Bingo! I access my account from home and from work, the latter being a US company who's IP addresses show up as Atlanta. Now if they asked me in the first place I could have explained, instead they blocked me out. In fact they still treated me like crap until, while on the phone, I logged in from home, then accessed work via VPN and logged in "from work". I talked her though the process and she could see live details as I did this. Even then, the fact that I could perform this black magic nearly backfired -she thought I must be a computing hacking criminal. In the end I was forced into purchasing a $20 secureid token on top of all the other fees I had incurred - over £100 out of pocket and knock on problems with other bills I couldn't pay in the month it took to resolve.
  • Piers N.
    First Direct called and left a message - so strong was the Indian accent I couldn't decipher it - I only realised it who it must have been in retrospect. A week later they called again and said they had tried to contact me a week before - there had been fraudulent activity on my card and had to cancel it. Why did they wait a week with no response risking further fraudulence? They have a messaging system with their internet access - why didn't they send a message to call them. They have an alternative phone number - why didn't they use that? I did ask but again the Indian accent was so strong the answers might as well have been Hindi. After a week without a card I received a PIN and no card. I called to be told a request for a PIN reminder had been ordered but not a replacement card - the buttons are next to each other on their screens and it always happens! Growl.
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