FOOL'S EYE VIEW
Why It Pays To Read Your Bank Statement

By Jane Mack (TMFJane)
November 8, 2002

There's a lot to be said for checking your bank statements. In the old days, before I became a Fool, I might have checked the bottom line if I could be bothered to open them. But I doubt if I was sufficiently in control of my spending at that time to have noticed anything untoward.

But yesterday I discovered I was the victim of fraud. Someone living somewhere in Reading has managed to spend £617.90 of my money over the last month. According to my bank statement, so enamoured of Asda were they that they paid three visits in one day and they sure seem to like the snacks as their local Esso garage.

He was crafty too, making sure the transactions were never more than £50 at a time so my bank wouldn't have noticed anything unusual about the sort of transactions that he was making.

Not surprisingly I freaked. I'm not sure why but I presumed I'd have to fight to make the bank believe me but it turned out to be quite simple.

What had happened was that at the end of September my card expired so I was sent a new one. Apparently some of the cards in the batch that was sent out that month were a bit dicky – something to do with the microchip. So, instead of waiting for those who had problems to contact them, the bank decided to issue brand new cards to everybody who was due a replacement that month. Mine appears to have intercepted and used for a spending spree.

Fortunately the rogue card had different digits to my own so the bank was able to separate the fraudulent purchases from my own and they're now going to refund me the full amount. I was fortunate in that it is the card issuer and not me who bears the cost of the fraud. I would only have been liable for the first £50 for fraudulent transactions although card issuers can choose to waive this liability as they have with me.

Card fraud is big business and it cost the banks £243 million in 2000 – an increase of 55% over the previous five years. It's a growing problem and it's obviously one the industry is working on. The UK's biggest building society, the Nationwide, has recently announced that it is to introduce electronic signatures to try to prevent fraud. Customers will be able to prove their identity by the way they physically sign their name because the system will measure the precise speed and direction of the hand as it writes. A simpler version involving the use of PIN numbers is expected to be rolled out by 2004. It's similar to the one used in France where you put your card into a machine at the cash till and punch in number which only you will know. Either way, it should soon be possible to avoid the sort of thing that happened to me.

When I was relaying my sorry tale to a friend last night he told me that when he and his wife had transferred to a different branch of their bank, they found themselves paying someone else's mortgage. It went on for three months before they thought to ask themselves why they were running so short each month. You'd think they'd have noticed that an extra £603 was going out of their bank account each month. But they didn't – because they didn't read their bank statements!

So, the bottom line is that it really does pay to check your bank statements. You might be short of funds because of someone else's mistake or because of theft. Yes, it's more likely to be because you're overspending but you'll never know unless you open those envelopes and look at the numbers.

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