Do banks refund scammed money?
May 12, 2024
Financial scams happen every day — from card-skimming machines that steal people’s debit card details to elaborate cons where scammers pretend to be trustworthy entities to trick people out of their money.
Most people’s biggest concern in the wake of these incidents is how they’ll get their money back. But do banks refund scammed money? The answer is a little more complicated than a simple yes or no.
Here’s everything you should know about what to do if you encounter a scam, what steps to take to retrieve your money, and how to protect your financial accounts from future attacks.
Can banks refund scammed money?
If you’re the victim of a banking scam, there are certain circumstances in which you may be able to recover your money — but this depends on the nature of the fraud, your bank's policies, and how soon you report the incident.
Most bank policies have protections for consumers who experience card fraud or unauthorized electronic transactions. For example, if someone uses your debit card without your consent and you file a dispute, your bank will likely refund the unauthorized transaction. However, if you voluntarily send money to a scammer through a wire transfer, your bank may not be able to reimburse you for your losses since you technically approved the transaction.
No matter the scenario, it’s especially important to report any potential scams to your bank as soon as possible. In some cases, while your bank may not be able to reimburse you, they may still have time to block the transaction before it posts to your account.
How to get your money back from a scam
If you encounter any fraud, it’s important to act quickly. Here’s what to do if you get scammed:
Document everything: Take screenshots and keep a record of all communication related to the scam, including emails, texts, and receipts. You’ll need these documents to prove the nature and severity of the scam.
Report fraud immediately: Contact your bank immediately when you notice fraudulent activity or find yourself tangled up in a scam. Early reporting can increase your chances of recovering your money. Depending on the severity of the fraud, you may also want to file a report with law enforcement. Be sure to provide all the information and documentation related to the fraud to aid in the investigation.
Follow the bank's procedures: Your bank will have specific processes for handling fraud claims. Follow these steps closely to make sure someone adequately addresses your case.
Monitor your account: Monitor your bank account for any further unauthorized transactions and report them immediately.
Seek legal advice: If you’ve lost a significant amount, consider getting legal advice to better understand your options for reclaiming your funds.
What if the bank won’t refund the stolen money?
Sometimes, despite your best efforts, your bank may decide not to refund you for money lost to a scam. When this happens, there are still a few steps you can take:
Contact your bank to dispute their decision: Send a detailed dispute letter to your bank, including all relevant information about the scam and your transaction. Emphasize why you believe you’re due a refund. Be sure to follow up within 15-30 days to track the progress of your dispute and confirm that someone is actively considering your case.
Escalate the matter within the bank: If the initial response is unsatisfactory, ask to speak with someone higher up. Sometimes, a review by a higher authority can yield different results. Sharing your experience on social media or with consumer advocacy groups can also accelerate the situation and potentially put pressure on the bank to reevaluate your case.
File complaints and seek further guidance: If the bank still refuses to issue your refund, you can file complaints with the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). The FTC is the government agency tasked with enforcing laws that prevent fraud and unfair business practices, and the CFPB is responsible for protecting consumers in any matters relating to financial transactions. Both can offer guidance on financial fraud matters and help with your case.
While there's no guarantee you’ll get your money back, taking prompt action and following these steps can significantly improve your chances.
How long does it take for a bank to refund stolen money?
Once a consumer reports any fraud to their bank, the bank has up to 30 days to respond to the report and 90 days to complete their investigation and resolve the case, per the Fair Credit Billing Act. Generally, how soon you get your money back can vary within this timeframe based on the type of scam and the complexity of the situation.
For example, banks usually issue refunds within 7 to 10 days for transactions involving a stolen debit card or unauthorized electronic fund transfers. For more complex cases, like those involving considerable sums or intricate tactics like a check scam, most banks will resolve claims within 10 to 45 days.
How to protect your bank account from scams
The best way to protect your money and stop fraud is to take proactive measures to safeguard your accounts. Here are a few key steps you can take:
Regularly check your account: Review your bank activity consistently to look for any unauthorized transactions and promptly report any suspicious activity. The sooner you detect and alert your bank to potential fraud, the better chance you have of resolving the issue quickly.
Use strong, unique passwords: Protect your online banking with strong, unique passwords, and consider changing them periodically. This simple step can be a significant barrier against unauthorized access.
Enable two-factor authentication (2FA): Using 2FA requires you to provide two different forms of identification, like a password and a code from a security app, to access your bank accounts. This way, even if a scammer obtains your username and password, they still can’t log in without the app code. You can even take it a step further and use IronVest’s biometric authentication, which requires a scan of your face as your second form of identification.
Educate yourself about phishing: Beware of phishing scams, where attackers deceive targets into revealing sensitive information. Avoid clicking links or downloading attachments from unknown or unsolicited emails and messages, as these can steal your data or download malware on your device.
Be cautious with digital payment platforms: Many fraudsters use peer-to-peer payment platforms, like Zelle and Venmo, to trick people into sending money under false pretenses. If you need to transfer money digitally, always verify the identity of your recipient before completing the transaction. Be wary of unexpected requests for money transfers, even if they appear to come from known contacts.
Use secure payment methods: Opt for secure payment methods, especially when making online transactions, and avoid using your debit card or banking information when possible. Credit cards and reputable online payment services like PayPal usually offer better protection against fraud. Alternatively, you can use masked credit cards from IronVest to avoid ever having to share your actual card information.
Elevate your financial security with IronVest's advanced protection
Understanding how banking scams work and how to spot them can help you better protect your finances in an increasingly digital world. With a little vigilance and a few proactive security measures, you can significantly reduce your risk of falling victim to these fraudulent activities.
To ensure you’re making the most of your security efforts, consider IronVest. With features like biometric fraud prevention technology and masked credit cards, you’ll enjoy a robust approach to safeguarding your digital assets and online activity. Get IronVest today and discover how you can bank online with more peace of mind.