Questions of cash: A fraudster spent a small fortune on my debit card

I signed up with Cahoot's savings account because of its good interest rate and because it has a debit card. In February I was phoned by the bank because of the high number of unusual transactions on the card, but I have only used it once. It turns out that my card was cloned and used fraudulently in France. I had £68,500 in the account, but when I checked it was down to £38,000 and a few days later payments were still being processed by the bank, taking the balance down to £14,000. Now I find that my balance is £3,500 overdrawn! Why couldn't the bank have refused to carry out transactions after they learnt the card had been cloned? I have written and phoned Cahoot several times, but I have not had the courtesy of a response. PS, Hampshire.

Money net

Q I signed up with Cahoot's savings account because of its good interest rate and because it has a debit card. In February I was phoned by the bank because of the high number of unusual transactions on the card, but I have only used it once. It turns out that my card was cloned and used fraudulently in France. I had £68,500 in the account, but when I checked it was down to £38,000 and a few days later payments were still being processed by the bank, taking the balance down to £14,000. Now I find that my balance is £3,500 overdrawn! Why couldn't the bank have refused to carry out transactions after they learnt the card had been cloned? I have written and phoned Cahoot several times, but I have not had the courtesy of a response. PS, Hampshire.

A Cahoot suggests your criticism is unfair, though it is sorry you suffered the fraud. It points out that it was proactive in spotting and ending the fraudulent use of your card. Cahoot froze your account, but is obliged by Visa rules to honour transactions already in the pipeline. The bank says that since your letter to us it has fully reimbursed you with the stolen funds, plus interest. While this would not help you, Cahoot is encouraging customers to use its recently launched web card for online transactions, which it claims will "virtually eliminate" internet fraud.

Q I am following with interest the debate in Your Money's Questions of Cash column (16 and 23 March) regarding tax-free gifts. Please could you say whether the recipients of cash gifts that are worth above £3,000 annually are required to declare them to the Inland Revenue? Where a gift is not tax-free [because the donor dies within seven years of a gift over £3,000] what amount of tax does the recipient pay? SC, Kent.

A Ruth McCarthy, tax adviser with the accountant Bentley Jennison, says that there is no need initially for the recipient to notify the Inland Revenue. If the donor dies within seven years, the recipient will become liable to pay the inheritance tax due on the gift. She adds that often donors will plan for this by either providing an additional legacy in the will to cover the tax due, or by taking out a life insurance policy that will meet the cost. In the last financial year, inheritance tax was payable at the rate of 40 per cent where an estate has a total value that exceeds £242,000. The threshold for the current financial year will be announced by the Chancellor of the Exchequer in the Budget on 17 April.

Q I am selling my home and will make about £30,000 net profit. I do not intend immediately to buy another property, but want to put the proceeds into a high-interest account or fund or scheme to give me the most income over a six-month period. I have been given different opinions on whether I will have to pay Capital Gains Tax (CGT) on the profit that I raise from the sale of the property. Can you advise? SS, London

A Matthew Carden, the technical director of Inter-Alliance, the independent financial advisers, says "With the short time that you have to invest, it is probably best to look for a bank account that pays high monthly interest so that you do not have to suffer a penalty for short notice withdrawal. Abbey National's internet-only eSaver Account offers 4.17 per cent for the initial six months, with no notice period. Standard Life pays 4.05 per cent with 50 days' notice and Teachers' Minster 60 account offers 4.07 per cent with a 60-day period for deposits for £20,000 to £40,000. Your Capital Gains Tax liability will depend on whether the property is your main residence. If it is and has been your main residence throughout the period of your occupancy, there is no CGT to pay. If the house was previously your main residence, and you sell within three years of moving out of it, there is no CGT payable. If, on the other hand, you sell the property more than three years after moving out, then CGT is payable on all time periods, except the periods of residence and, of course, the last three years of ownership."

If you have any questions about personal finance topics or problems, please write to Questions of Cash, 'The Independent', 191 Marsh Wall, London E14 9RS, or e-mail cash@independent.co.uk. We regret that we can reply only to letters published here. Please send copies, not originals, as we cannot undertake to return material.

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