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Online banking nightmares: New security hurdles, disappearing money and how banks got to shift the blame - Mail OnlineL

Anna and Daniel Rhodes live in a remote part of Kent. Their nearest cash machine is three miles away, and their closest bank branch is seven miles away in Dover.

They are exactly the type of people who should benefit from the boom in online banking.

Yet every time the couple, who are both teachers, want to use the computer in their living room to pay a bill or transfer money, they are forced to hop in the car and drive almost two miles down the road.

Frustration: Anna and Daniel Rhodes outside their house near Dover, Kent, where they are having problems with their online banking because they have no phone reception
This is because of security measures put in place on their online account with Tesco Bank. It allows them to transfer money when they have been sent an eight-digit code to a mobile phone.

But as is the case for thousands living in rural communities, their home has no mobile phone reception — forcing them to make the ten-minute round-trip to get a signal.

Mrs Rhodes, 39, says: ‘I have to start logging on, then get in the car and drive until I get a mobile signal. When I have one, I have to race back home in order to continue logging in before they stop my transaction because I have taken too long.

‘It’s enormously frustrating because Tesco seems to have made no provisions whatsoever for customers with no mobile signal.’

Tesco blames a problem with Mr and Mrs Rhodes’s computer — and has worked to help them fix it. But Mr and Mrs Rhodes are not alone in their frustrations.

Internet banking has boomed in the past decade. At the turn of the century, just three million people had banked online — today 20 million have used an internet bank account at some point. Many customers have fallen in love with online banking — it allows them to avoid queues in branches and carry out day-to-day transactions round the clock.

And banks want us to bank online, too. Branches — with staff costs and rent — are expensive to run. After the cost of setting up a website, each transaction made online saves them money.

It also shifts responsibility from a member of bank staff to a customer. And those who bank online often stop having paper bank statement sent in the post. This not only saves paper, but also the cost of printing and postage.

Yet for those who aren’t computer savvy or don’t have easy access to the internet, online banking can be daunting. More than eight million people have never used the internet at all, and 23  per cent of households still do not have the internet, according to the Office for National Statistics.

Age charities say many older pensioners do not feel comfortable with online banking — often because they are worried about fraud and feel ill-equipped to spot a fake website or email.

And many people are unable to use online banking because of sight or dexterity problems. Michelle Mitchell, charity director general of Age UK, says: ‘The banking industry must design accessible digital banking services and support older people in using them.’

Many people have been forced to bank online as banks have shut branches. In the past ten years, 1,889 branches have closed. There are now 1,000 communities with no bank at all, according to the Campaign for Community Banking Services.

Liberal Democrat MP Roger Williams has fought the closure of a Barclays and an HSBC branch in his rural Welsh constituency of Brecon and Radnorshire.

He says: ‘Banks say customers affected can do much of their banking online. But many of my older constituents are either reluctant to use internet banking, or do not have access to the safe, fast broadband they need to do this.’

PROTECTING YOUR CASH FROM CROOKS

As more customers checked their accounts online, fraudsters realised there was easy money to be made by hacking into people’s accounts.

More than 70,700 people had their online bank accounts hacked by fraudsters last year, a 4  per cent increase on 2010, according to fraud prevention service Cifas.

As criminals have got smarter, the banks have had to put in more layers of security. They have armed their customers with little gadgets and asked them to remember several passwords, all with different combinations of numbers and letters, in order to combat the fraudsters.

Banks admit it can be difficult to strike the right balance between a website that is safe from criminals and one that is user-friendly.

Barclays, Co-op, RBS/NatWest and Nationwide all issue their internet banking customers with card readers.

These are little gadgets, which look like small calculators, that customers are asked to insert their debit card into.

They then follow instructions on the website and enter their debit card Pin to get a pass number to enter into the website. This code is valid for you only at that moment.

At Barclays, you need your card reader to log- on to your account; at others, such as NatWest and Co-op, you only need to use it when paying someone new.

But older — and many younger — people find these small and fiddly to use. And even savvy internet customers don’t like having to carry the card reader around with them. Some have also complained the pass number is valid for only a few seconds, so by the time they input the code it is not accepted.

HSBC has a small gadget that generates a pass number when you input your Pin. However, you do not need to insert your debit card.

Lloyds TSB, Halifax and First Direct customers do not have card readers. Other banks require customers banking online to have a mobile phone.

At Santander, customers banking online who want to send money to someone they have never paid before, or change their personal information such as their address, must have a code sent via a text message on their mobile phone.

Those with no mobile, or in areas with no signal, are instead forced to use telephone banking.

Many Tesco Bank customers access their savings account by having a passcode sent to their mobile phone.

WHY MISTAKES ARE EASY TO MAKE

Using a website may be almost second nature to someone who uses a computer or smartphone every day. They are used to the language, look and instructions of a typical website.

But for millions who rarely use the web, the internet can seem a daunting, confusing and dangerous place.

Critics say banks often have confusing drop-down menus, which can lead to customers accidentally diverting their cash to the wrong person. When you send money to someone for the first time, the bank will ask you to give them a reference, so you can identify their account for future use.

Each time you make a new payment the list of people and businesses you have paid before will pop up. But if you have several names which all look similar, such as Mr R Jones and Mr T Jones, then it is easy to send the money to the wrong person.

This shouldn’t be a problem if you’re on good terms with your family and friends, but it could be a nightmare if rather than sending money to your mother, you accidentally send it to your ex-wife with whom you are no longer on speaking terms.

And confusion occurs not just with your payees. Paying a credit card bill can also be a challenge. Many bank websites have a drop-down menu containing hundreds of different types of credit card you can pay, many with similar sounding names.

For example, Nationwide online banking customers can choose from 22 different Bank of Scotland credit cards, including the similar looking Bank of Scotland Platinum Visa and the Bank of Scotland Premier Visa.

However, the building society claims it is impossible to pay the wrong account, as customers must also input their credit card number.

A spokesman for the UK Payments Administration, which represents the major banks, says: ‘Each bank’s online banking service will differ.

‘While they all strive to strike a balance between functionality and security, if you find your banks’ security features are hampering your ability to bank online, it’s definitely worth speaking to them. Failing this, consider shopping around to find out what other providers offer.’

The drive to go online has also left many people without paper statements, so they have no paperwork showing historic transactions.

While some banks, such as NatWest, let customers view transactions going back six years, others, including Nationwide, go back only three years.

If a customer wants to go back further, they must go into a branch, where they will be charged £5 for a month’s statement or £10 for two or more.

Customers also complain about banks forcing them to download anti-virus software, when they may have protected their computer already, and of never getting replies to emails for simple questions. And those shopping online have more passwords to remember with the Verified by Visa system and MasterCard SecureCode.

HOW BANKS GOT TO SHIFT THE BLAME

A bonus for the banks from the online boom has been that customers have had to take increased responsibility for their actions.

When their own staff make mistakes, banks are motivated to put them right. But increasingly customers complain that when they make a mistake banking online, it can be impossible to get their money back.

Many have been left without thousands of pounds after accidentally getting one digit wrong when transferring funds.

If this happens, getting your money back can take months of phoning and writing to your bank. This is because bank rules stop money accidentally transferred from being snatched back immediately.

Instead, your bank must speak to the other bank, which must then ask the recipient to give the money back. However, getting two banks to talk to each other can be near impossible. And the recipient can also refuse to refund the cash.

They are not allowed to spend the money or benefit from it in any way — but they don’t have to give it back.Data protection rules mean you are unlikely to know the name of the person who has your money, though you will have their account number and sort code.

Therefore you may have to get a disclosure order via the courts to force the bank to tell you the name of the person who has your cash.

Once you have their name, you can take this to the police and pursue them through the courts — but this can be a lengthy, expensive and stressful process.

If you’re lucky, the account won’t exist and you should get an error message saying that the payment never went through.

The UK Payments Administration admits it can take ‘a little while’ to recover money.
How to bank and shop safely online: www.thisismoney.co.uk/online

Friday, 27th April 2012

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