Fraud

kim_kat

Hi All,

My parents were phoned by their bank (First Direct) yesterday to check if they had authorised payments totalling £2550 in the previous 24 hours. As it turns out, someone has got their card details and gone on a spending spree.

The bank is claiming that because the transactions are 'pending', they have to let the payments go through, before they can then reclaim them back from the companies involved as a fradulant payment. My parents have been told that this can take months, and that there is no way the payments can be stopped from going through. However, when I had my details stolen two years ago, my bank (Santander) stopped the charges as soon as I said they weren't authorised.

Can anyone tell me if what First Direct are saying is true? Surely if the payments haven't yet gone through, they can be cancelled straight away. What's the point of them phoning to see if they've been authorised if they're just going to carry on for a while anyway!

This has had a knock on affect, as all the household bills are paid from this account, meaning that my parents have had to arrange an overdraft to cover them for the time being, and they get charged for that!

Many thanks in advance for your help.

jalexa

kim_kat wrote: »

Hi All,


Can anyone tell me if what First Direct are saying is true?

I don't know *exactly* what they said and it may have been a "techical" explanation rather than "helpful" explanation.

Banking regulations *require* that a "quick" refund (at this time in the morning I can't remember the *exact* term), but no more than a few days.

The bank must *prove*, (not assume), the payments were authorised by the account holder. The account holder doesn't need to "prove" anything, but beware of "trick questions" when discussing the "fraud". If the account has not been re-credited in a few days, raise a formal complaint.


Edit:

The "regulations small print" is here at 5.1.11 and 5.1.12

http://www.fsahandbook.info/FSA/html/handbook/BCOBS/5/1

kim_kat

Many thanks for your reply.

They've agreed with my parents that the payments are fraudulant (they've been with First Direct for 18 years and passed all the security questions). I did double check with my Mum what the bank said becuase I didn't believe it. First Direct have said that the payments are pending, and they must honour the payments to the companies involved. Once they have gone through, they will then claim it back as fraudulant from those companies.

Which seems silly to me, if they haven't gone through surely they can just be cancelled!

Naf

kim_kat wrote: »

Many thanks for your reply.

They've agreed with my parents that the payments are fraudulant (they've been with First Direct for 18 years and passed all the security questions). I did double check with my Mum what the bank said becuase I didn't believe it. First Direct have said that the payments are pending, and they must honour the payments to the companies involved. Once they have gone through, they will then claim it back as fraudulant from those companies.

Which seems silly to me, if they haven't gone through surely they can just be cancelled!

I believe its something to do with the debit card's systems (VISA I assume?) and the agreement involved in using this payment method (i.e. the agreements between banks, VISA and vendors). There really isn't anything much they can do until the payments are claimed and cleared, then they can reclaim them. At present the payments are pending, meaning the companies in question have authorised, but not claimed payment. In theory, some of the amounts could be different when they're claimed than when they were authorised (hotels, online supermarket shopping) so they have to wait if for no other reason than to ensure what exact amounts are taken (even possible that no amount is taken, even though there is an authorisation).

System

If the bank apply charges for the arranged overdraft etc, then they should also refund anything that has been caused by these fraudulent transactions.

Make sure that your parents keep a close eye on any direct debit payments that are due so that no payments are missed.

I assume the card will have been cancelled, the bank should send a replacement without delay.

Keep chasing the bank to make sure your parents can access their money, do not let the bank drag it on for days - weeks - months

jalexa

kim_kat wrote: »

Once they have gone through, they will then claim it back as fraudulant from those companies.

Which seems silly to me, if they haven't gone through surely they can just be cancelled!

I hope there has not been a misunderstanding of what First Direct are saying (and doing).

The account holder has no contractual relationship with Visa and cannot be bound by the Visa timeframe and/or processes and need not (and should not) be informed of them. The contractual relationship is *only* with First Direct which is bound (on the issue) by Regulation 5.1.11.

The regulation refers to a "reasonable period" but it is not a defined term. My understanding is that "reasonable period" in practice is supposed to mean somewhere between "immedately and a day or two".

Forget the "fraudulant transactions" (which by definition are nothing to do with the account holder), if the account available balance is not restored to the pre-fraud balance within a "reasonable period", a formal complaint should be raised with First Direct.

I cannot exclude the possibility that the particular customer facing person spoken to at First Direct wasn't fully competent on the timeframe (and/or the back-office policies and procedures)

Bloomberg

kim_kat wrote: »

Hi All,

My parents were phoned by their bank (First Direct) yesterday to check if they had authorised payments totalling £2550 in the previous 24 hours. As it turns out, someone has got their card details and gone on a spending spree.

The bank is claiming that because the transactions are 'pending', they have to let the payments go through, before they can then reclaim them back from the companies involved as a fradulant payment. My parents have been told that this can take months, and that there is no way the payments can be stopped from going through. However, when I had my details stolen two years ago, my bank (Santander) stopped the charges as soon as I said they weren't authorised.

Can anyone tell me if what First Direct are saying is true? Surely if the payments haven't yet gone through, they can be cancelled straight away. What's the point of them phoning to see if they've been authorised if they're just going to carry on for a while anyway!

This has had a knock on affect, as all the household bills are paid from this account, meaning that my parents have had to arrange an overdraft to cover them for the time being, and they get charged for that!

Many thanks in advance for your help.

I was recently told by a member of staff at HSBC (Parent company of FD) that alleged fraudulent transactions are refunded within two hours and that the bank will investigate thereafter. I personally never use my debit card for any purchases for security reasons. I always use my credit card, if this gets cloned and the bank want to take three months or longer to sort it out then that is not my problem.


I would suggest that your parents star using a credit card for everything too. If the £2550 problem involved a credit card I dare say that they would be far less anxious. Credit cards offer some purchase protection and also provide an excellent spending diary. Another advantage of a credit card is that you do not have to worry about how much money is in your current account on any particular day. All the best.

Naf

jalexa wrote: »

Forget the "fraudulant transactions" (which by definition are nothing to do with the account holder), if the account balance is not restored to the pre-fraud balance within a "reasonable period" a formal complaint should be raised with First Direct.

But until the transactions have cleared (usually 2-4 working days), the account balance is unaffected; only the available.

I fail to understand why VISA insist on a payment system that takes days to process, but then not allow those days to be used for fraud prevention, particularly in cases such as this.

jalexa

Naf wrote: »

But until the transactions have cleared (usually 2-4 working days), the account balance is unaffected; only the available.

Well perhaps, but in practice within the pending household expenditure of the "available balance" that is what is important. As the OP indicated by reference to "overdraft".

kim_kat

Thank you very much for your replies. This confirms what I suspected, and I shall let my parents know immediately.

Regarding CCs, I know what you're saying about them being safer, but long story short they are currently not holding a CC and have no desire to in the near future.

Bloomberg

Naf wrote: »

But until the transactions have cleared (usually 2-4 working days), the account balance is unaffected; only the available.

I fail to understand why VISA insist on a payment system that takes days to process, but then not allow those days to be used for fraud prevention, particularly in cases such as this.

I am almost sure that the reason why the payments are allowed to go through is because the once a merchant accepts a VISA/Mastercard payment it is guaranteed. I am guessing that the merchant will get the money and that VISA or FD will take the hit. Millions are lost every year through this kind of fraud this is small beer when compared to the Billions which banks make.