By Alison Steed
MyMoneyDiva.com

Internet banking users have reached the highest level yet in the UK, with 22m banking online to deal with their current accounts, according to data from the Payments Council, yet online bankers could be losing a staggering £439m a year in transactions that go astray because of a lack of protection.

More than half of the 41.5m internet users are now banking online as a main way of dealing with their current account. The most common uses are to check balances and check statements – around nine in 10 of us using online banking do so for these reasons – but an increasing number of us are undertaking online transactions.

While convenient, if you make a mistake with an online transaction then you could struggle to get your money back as there is no current legislation in this specific area which can protect you.

If you enter just one wrong digit in the bank account number of the transfer beneficiary you could be in for a serious problem. This could represent – in our estimation – a staggering £439m to Brits which even the Financial Ombudsman is powerless to assist in retrieving.

There’s a good chance that your hard-earned cash will be gone for good if it lands in the account of a total stranger. Last year a bank worker found herself in this very position after accidentally transferring £2,000 into the wrong bank account.

If a mistaken transfer is being processed already, the person who made the error must first contact their bank who can then only request that the receiving bank contacts the beneficiary of the funds to ask that they be returned.

A bank may simply “request” that a payment made in error be refunded under current legislation. If that permission is denied, or the request is ignored, there is nothing else the bank can do.

To add insult to injury, it’s very difficult for the person who made the errant transaction to take legal action against the receiving account holder to recover the money, as the Data Protection Act prohibits the bank from revealing customer details.

In turn this makes it impossible to chase any individual for the money as you wouldn’t know who to take court action against. You could ask a judge to rule that the banks have to divulge the details so you can pursue the person, but this will cost you more money. Having already lost money through the original error, this is hardly the ideal option for getting it back.

As the law stands, a person could legitimately ‘steal’ your money and it would not be regarded as theft as it appeared in their account though no action of their own.

As much as you would hope that the beneficiary of an unexpected amount of cash would be decent enough to give it straight back, they are not required to do so, and could come as a pleasant surprise to someone who may be struggling to pay the monthly bills.

We are working on trying to build a case for the law to be changed to offer more protection to online banking users, but for now, there are five top tips on what you can do to try to protect yourself:

1. Be sure to check the details you have entered closely. Ask another household member to check them with you if possible.

2. Be careful if you are choosing your recipient via a drop-down list option, which is a favourite of many online banks – it is very easy to select the wrong name.

3. Once you realise you have made a mistake, get in touch with your bank as soon as possible – even if you have to send an email in the middle of the night. The sooner you let them know, the better the chances are that the payment can be stopped before it leaves your account, and that is the easiest way of unpicking this thorny problem.

4. If you have a significant amount of money to move you should perhaps consider telephone banking or banking in person, as using online banking for large amounts of money is risky. You will at least have some comeback then if the bank teller inputs the wrong details. If you do decide that online banking is better for you, take extra care when carrying out your transaction. Many banks will have a limit on how much can be transferred in one day in any case – usually this is around £10,000.

5. In order to minimise losses should something go wrong, think about transferring largers sums as a series of smaller transactions.

MyMoneyDiva.com would like to hear from anyone who has had problems along these lines. Please go to www.mymoneydiva.com/community and tell us about what happened.

Alison Steed is the editor of the personal finance website for women MyMoneyDiva.com.