Shock as ‘innocent victim’ sees bank account frozen due to £40 transfer to friend

It follows caution from the consumer complaints group that people are unable to withdraw money or pay bills because some banks are being over zealous when it comes to preventing fraud. Of these 1,000 complaints, some involved payments of less than £50 and many were left with no access to their own money and unable to resolve the matter quickly.

According to Resolver, people complaining their accounts have been frozen have hit record levels over the last two years.

It’s not unheard of for people to have their accounts put on hold if their bank suspects fraud or money laundering, but it’s happening more often for transactions of £50 or less, its research has found.

Another complainant told them that they had suffered a 13-week freeze on their account after three innocent transactions from a relative triggered a red flag – even though one was for just £50.

The result is that people on low incomes are being left without access to vital funds for months with little support from their banks.

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The company analysed 4,300 complaints over the last 12 months where people had selected ‘account problems’ as their main area of complaint.

Of those, 1,000 complaints were explicitly about bank accounts that have been frozen, blocked, suspended, or even closed for no reason.

Resolver said that when this problem first emerged, it was largely confined to some of the newer ‘digital’ banks – with complaints to these organisations accounting for almost three-quarters of those analysed.

Now, however, a quarter of these cases are about established well known high street banks, making it clear that the issue is becoming more commonplace.

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Despite the fact anti-fraud procedures have never been more vital for the banking industry, complaints are being made from customers who believe there is no valid reason for their accounts being put on hold.

And one thing that could be to blame is over sensitive algorithms, something backed up by the group’s findings.

Examples of these types of complaints include deposits from benefits or Universal Credit, rebate payments from HMRC, wages and innocent gifts from friends or relatives.

And it wouldn’t be such a big deal if people were able to contact their banks and get the matter resolved quickly, yet one in ten cases involved accounts frozen for at least two weeks from the time the complaint was made through Resolver.

Resolver’s Chief Operating Officer, Nikki Stopford said people don’t begrudge their banks being more careful when it comes to fraud, instead they want them to employ common sense and resolve matters more quickly.

Ms Stopford explained: “Given the endemic levels of fraud over the last two years, few people would begrudge banks being a little more cautious in the measures they introduce to shut down the scammers.

“Yet in the vast majority of frozen account cases Resolver analysed, it’s clear the people involved are innocent victims of overly sensitive algorithms.

“The irony is it’s incredibly easy to solve this problem.”

She continued: “All banks need to do is have well trained and empowered staff on the front line with the power – and common sense – to identify why the account has been frozen, confirm the origins of the transaction and unfreeze the account.

“Technology can really improve our lives for the better, but in situations like this, the value of human intervention cannot be overstated.”

One in ten cases involved accounts frozen for at least two weeks with complainants trying repeatedly to sort the issue with their bank directly, in some cases taking between three and six months.

An alarming number of consumers said this was done ‘without warning’ including those with their accounts suddenly closed without the standard 28 days notice.


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