An Abbey customer who says she had £10,000 fraudulently withdrawn from her account is pursuing legal action against the bank after it refused to issue compensation.

Emma Woolf, 27, was horrified to discover after logging on to her Abbey business account in March that her balance, which should have been about £10,000, was just £23. Fraudsters had been draining the funds for three months, mainly by making withdrawals at cash machines of up to £500.

Ms Woolf says that she phoned Abbey immediately, and a member of staff said that her card had been cloned and her address and phone number changed by fraudsters. However, since then, Abbey has been very uncooperative in handling her claim and the bank has refused to pay back the money.

Ms Woolf, who runs a website business in north-west London, says: “I use my business account on an occasional basis to pay in cheques and for direct debits. I have not made a cash withdrawal on my account for several years - so endless cash withdrawals on the account is very out of character and was not flagged up by the fraud team.

“Abbey are now saying that it was my card and PIN used during the transactions – but I have kept my card locked in my safe since October.”

Ms Woolf is one of many Times Money readers who say they have been a victim of chip-and-PIN fraud but their bank has refused to pay out – claiming that the customer must have been negligent with the PIN.

The Financial Ombudsman Service, which handles consumer complaints against banks, says that it now deals with 50 cases a week of customers locked in disputes over PIN fraud.

Under the Banking Code, to which all banks must adhere, customers are responsible for losses arising from fraud only if they acted “without reasonable care”. This could include writing down a PIN or allowing someone else to use a card.

The code clearly states that unless a bank can prove that its customer acted fraudulently or without reasonable care, the most that the customer will be liable for is £50.

A spokesman for Abbey said: "Miss Woolf has admitted that she changed the PIN to a number that would also be known to others in her household."

However, Ms Woolf is adamant that she has never told anyone else her PIN and that no one else in her household could have known the number.

The Abbey spokesman continued: "The transactions all took place close to Ms Woolf’s house. The Chip and Pin system within the UK remains secure and has not been compromised. The transactions disputed by Ms Woolf were all made using the original card which was CHIP read with a valid PIN.

"We did wrongly tell the customer that her card may have been cloned. This was an adviser error. We offered Ms Woolf a gesture of goodwill and apologised for this error."