UK Bank Account Fraud Victims May Not Be Compensated Under New Plans

We all believe that if our money is safely deposited in a reputable bank, that our hard earned cash is safe. Imagine the horror of trying to withdraw money from the ATM one day and discovering that you’ve been robbed of all your savings. When you call the bank to report the theft, your bank says, “You’re responsible for the fraudulent activity in your account. We’re not compensating you!

Could you survive this financial crisis?

While this scenario may seem absolutely ridiculous – not being compensated for fraud in your bank account may soon be the new reality in the United Kingdom. The Financial Times reports that under new proposals by British lenders, the Bank of England, the UK Government, and the national cyber security organisation GCHQ, victims of bank fraud will not be compensated. In addition, individuals and companies who have lax online security could even be found that their online banking services are frozen.

The onus is being put onto bank account holders due to the massive amount of financial fraud occurring due to sophisticated bank hackers. According to the Financial Fraud Action UK, internet banking fraud cost the British £134m – an increase by 64% in 2015!

The GCHQ recommends that private sector organisations such as banks should take a more active cyber defence approach to stop these attacks from occurring. For example, they recommend that companies should encourage their customers to improve their cyber security standards such as by updating their computer software to reduce vulnerabilities.

The Financial Times reports that Adrian Leppard, former Chief of City of London Police and current director of a cyber security consultancy said that, “It seems reasonable that customers should take the most basic steps to prevent crime and that the banks should only have to recompense those who have done so. It is a good step in encouraging a necessary culture shift that requires society to take such steps. At present there seems little motivation to do so if the banks will always [pay] out!”

A four step process may be implemented to encourage people to improve people’s cyber security:

  1. Customers detected using an outdated internet browser or an ineffective antivirus software would be urged to upgrade
  2. If they do not upgrade, they will only have access to basic online banking services
  3. Internet Service Providers should bar customers if they are known targets of malware
  4. Customers with poor cyber security will not be compensated for any losses due to ‘gross negligence’

What do you think about these new plans for victims of online hacking to not be compensated because their computer security is lax? Should they receive compensation or not? Let us know what you think!

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