Your right to a refund for an unauthorised payment

16th October 2019

If someone criminally inclined gets access to your bank or credit card details, you could see a lot of money disappear. No matter how careful you are to keep your identity and personal details safe and secure, you may still have your bank details stolen or other personal details compromised through no fault of your own.

DAS Law’s Bethan Mack shares some ‘need to knows’ if this happens.

Bank compensation for unauthorised transactions

If someone has taken money from your account or used it to make an unauthorised transaction, the bank must refund the payment, unless they can prove that it was authorised by you or that you were at fault.

How to get money refunded

If you notice that a transaction that you did not authorise has been carried out, you must notify your bank immediately. They can then take steps to ensure that no further money is taken – the bank is required to refund you for any unauthorised transactions that take place after you notify them.

If you have any evidence to prove that you did not authorise the transaction, you should provide that too – for example, if money was taken from a cash machine, you could provide the bank with proof that you were somewhere else at the time of the transaction.

Unless the bank disputes whether or not you are entitled to a refund, they should refund the money without any undue delay and by the end of the business day following the day they were notified of the problem.

They should also refund any charges that you have incurred as a result – for example, if the transaction puts you into your overdraft, the bank should refund you any overdraft fees.

When can the bank refuse to refund?

The bank may refuse to give you a refund for any of the following reasons:

You did authorise the transaction

Simply enough, the bank thinks that you did authorise the transaction, and that you are not due a refund as a result. (Note that deliberately making a false unauthorised transaction claim will likely get you reported to the police for fraud.)

You left it too late to notify them

You must notify the bank of an unauthorised payment within 13 months of it taking place – tell them any later and you will not be entitled to any compensation.

You acted fraudulently or negligently

You did not take enough care to protect your account from being compromised, making it easier for someone to access your account. This could include failing to keep your online banking password or your PIN private, or having your card lost or stolen and not telling the bank quickly enough.

Bear in mind that the burden of proof is on the bank in this situation. They can’t force you to prove that the transaction was unauthorised; they can only refuse to refund you if they can prove it was your fault.

If you don’t agree with the bank

If you think the bank is wrong to refuse to reimburse you, you can escalate the claim through the bank’s internal complaints process.

If the bank still won’t budge, you can take your complaint to the Financial Ombudsman Service.

You can use the complaint form on their site, or call them on 0300 123 9 123 or 0800 023 4567.

You should ask your bank to provide you with a final response letter to confirm that you are at a stalemate – the ombudsman may require this before taking on your case. If the bank sends this letter (or does not respond to the request within a couple of weeks) you should take your case to the FOS.

If the FOS decides that you shouldn’t be refunded, your last resort is to take the case to court. However, before taking the bank to court, you should consider that:

  • The court may not rule in your favour;
  • Even if you win, the refund you get might be wiped out by court and legal fees; and
  • Going to court is an inconvenience, to say the least.

Unauthorised direct debit payments

If a direct debit payment has been made from your account in error, you are entitled to claim the money back from your bank under the Direct Debit Guarantee. If this has happened, contact your bank.

You can also claim a refund if the amount or frequency of a payment is changed without enough notice. For example, if you had a direct debit of £5 a month to an organisation, and the organisation increased the amount to £10 without warning you first, you are entitled to a refund.

Disclaimer: This information is for general guidance regarding rights and responsibilities and is not formal legal advice as no lawyer-client relationship has been created. Note that the information was accurate at the time of publication but laws may have since changed.

Who to contact when your business is defrauded

William Ellerton shares some general advice on the first things a business should do if they believe they have been defrauded.

January 2019 Learn more
Probate fraud and will forgery

Probate fraud can be committed in a number of different ways, and is more common than you might think. Be careful and stay vigilant during probate.

April 2018 Learn more

Read more from the DAS Law blog

Goods and services disputes Don’t take a gamble when it comes to online betting

Simon Roberts gives you the inside track on how to check out the legitimacy of a betting site and your legal options if your online bookie won’t pay you out.

March 2022
Goods and services disputes How to escape your gym contract in the new year

Gyms are prepared for a New Year’s resolution rush and every January, millions of people rush to sign expensive gym membership contracts. But how fair are these contracts and can you terminate them if your situation changes?

January 2022
General advice , Employment disputes Be on your best behaviour at your work Christmas party

A party that is being held outside the workplace should still be treated as an extension of the office.

December 2021
Goods and services disputes What Black Friday and Cyber Monday shoppers should know about their consumer rights

If you are waiting to see the myriad of deals that Black Friday and Cyber Monday will offer, you need to know your rights when it comes to buying online.

November 2021
General advice , Property disputes How far you can legally go to stop people from playing a ‘trick’ on you this Halloween

Halloween is generally a ‘spooktacular’ time for all but a few bad apples can spoil the fun. So what can you do if someone chooses to play a trick and damages your property?

October 2021
Goods and services disputes Online ticket scams are on the rise – here are your legal rights

Do buyers have any legal recourse when it comes to purchasing counterfeit tickets? What are the risks when buying tickets from resellers, and what is the best way to protect yourself from ticket scams?

July 2021
General advice , Property disputes Everybody needs good neighbours. But what can be done if someone refuses to be neighbourly?

What happens when a neighbour’s plant is growing across onto your property? And what can be done if a neighbour’s tree is blocking the light into your garden?

May 2021
Goods and services disputes An online review could land you in hot water with the law

Could sharing thoughts and experiences online turn into an unexpected legal dispute?

February 2021
General advice , Protecting your business 5 things you need to know about missing the 31 January self-assessment deadline

With 31 January deadline fast approaching, there are just ten days left for the UK’s 5.4m taxpayers to submit their Self-Assessment tax returnss. What can you do if you miss the deadline?

January 2021
General advice NHS Covid-19 Test and Trace App: What happens to our personal data?

Legal adviser Chloe Williams explains how much we know about how the app works and what happens to the personal information we share.

November 2020
General advice University tuition fees and accommodation costs in a Covid-19 world

Universities have switched to online lectures and some campuses are imposing strict social distancing measures – what rights do students have?

September 2020
Road traffic accidents , General advice What the new rules have to say if you are planning to ride your own e-scooter

E-scooters may have become commonplace on our streets over the last few years but technically they are illegal…that is until now, sort of. But what do owners and riders need to know?

July 2020
General advice , Motorcycling What you should know about cycling laws

Where does the law stand on helmets, safety cameras and cycling offences? Chloe Williams, Legal Adviser from DAS Law, has the answers.

June 2020