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How Do Banks Investigate Fraud in the UK?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedOct 20213 min read

Whether due to a stolen card or identity theft, you’ve spotted unauthorised charges on your bank statement and reported it to the bank. What happens now? What do banks do to investigate fraud, and how long does this process take? We’ll discuss the ins and outs of the bank fraud investigation procedure below.

What is bank fraud?

Bank fraud is an umbrella term that covers any type of theft from an individual or business account. It also includes theft from the bank itself. Here are just a few examples of bank fraud that might warrant an investigation:

Identity theft
Lost or stolen credit cards
Money laundering using fraudulent login details
Hacking bank computer systems
Using retail POS systems to issue fraudulent chargebacks
Cardholders disputing transactions for chargebacks

As you can see from the range of fraudulent activity above, a bank fraud victim could be an individual or merchant.

What do banks do to investigate fraud?

The purpose of any bank fraud investigation is to pinpoint the criminal activity, identify the criminals, and then return any stolen funds to the individual or merchant. Secondary goals of any bank fraud procedure include awareness of the main types of fraud, which helps prevent it from happening in the future.

With these goals in mind, how do banks investigate fraud? The first step is to prove that fraud has occurred. When you go to the bank and report unauthorised charges to your account, the bank will ask you for more information. It’s helpful if you can document charges with receipts, emails, or other proof of purchase. From there, the bank’s security team will be able to move through all the steps of the fraud investigation process.

Understanding the bank fraud investigation process

What do banks do to investigate fraud? While specific bank fraud investigation procedures will vary depending on the type of scam, here’s a general outline of what you can expect.

Step 1: Identify the fraud.

At this first stage, the bank or victim will be on the lookout for signs of fraudulent activity. Examples include unfamiliar payments appearing on your statement, alerts that you’ve hit your credit card limit or overdraft, or notifications about a new account opened in your name. If identity theft has been ongoing, victims might even receive letters from debt collectors. It’s not unusual for fraud to go unnoticed for some time. In these cases, the bank might be the first party that notices suspicious transactions, in which case they will contact the account holder for verification.

Step 2: Begin the investigation

Now that the fraudulent activity has been identified, it’s time to investigate. At this stage, the account holder’s cards are cancelled or put on hold, with new cards issued when necessary. You’ll need to provide the bank with as much information as possible to aid in their investigation, including receipts and other financial documents.

Bank investigators will also look at detailed transaction data, including location data, IP addresses, and time stamps to determine what happened. Sometimes, fraudulent transactions will be due to family members using the card – one example would be a child making in-app purchases without their parents’ knowledge.

Step 3: Reimbursement of lost funds

If the investigation is successful, it’s the bank’s job to reimburse the individual with stolen funds. It’s important to be patient at this stage, as it can take several business days to get your refund while the investigation is pending. Unfortunately, when merchants are the victim of fraud there are fewer protections. You may have longer to wait for any positive outcome of the investigation.

The outcome of bank fraud investigation UK

The result of any bank fraud investigation is usually a full refund for the cardholder, provided the bank can determine that legitimate fraud has taken place. But what is the outcome of bank fraud investigation in the UK when it comes to chargebacks? Normally, issuing banks will return money to the merchant if a chargeback is disputed as fraudulent. Yet in the case of friendly fraud, such as the example of a child making in-app purchases, the bank usually takes the customer’s side instead.

Ultimately, whether fighting chargebacks or identifying theft, it’s important to understand that there are defined procedures put in place. You’ll need to work with the bank’s investigators and provide all requested data to come to a mutually satisfying conclusion.

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