We received complaints from several of the Bank’s customers who alleged that they had lost their credit cards and thereafter several unauthorised transactions occurred on their accounts. These transactions exceeded the agreed credit limit on the accounts.
The Bank denied liability on the basis that the cards and PIN numbers were compromised, and that each complainant had a duty to protect the card and his/her confidential banking information. The Bank maintained its denial of liability despite acknowledging that the respective credit limits were exceeded.
The Bank further submitted that it believed the complainants to be part of a syndicate acting against the Bank, which syndicate found a loophole in the Bank’s systems which prevented the Bank from detecting that the relevant limit had been exceeded. The Bank confirmed that it had since closed this loophole.
Whilst the Bank alleged that the complainants were members of a syndicate, there was no evidence to support this allegation and this Office had no option but to assess the merits of the matter based on the information in our possession. Whilst we accepted that the cards and PIN numbers had been compromised, it is important to remember that the relationship between a Bank and its customers is contractual in nature.
The parties agreed to a maximum limit on the account. The Bank breached this contract by allowing the limit to be exceeded.
Furthermore, the Bank had a duty to provide safe and secure banking systems and the complainants could not be held liable for a loophole in the Bank’s system.
It was our position that the Bank had to refund all transactions performed over the agreed limit. The Bank eventually accepted our position and proceeded to refund the customers.
PRINCIPLE: Banks have to take accountability for any loopholes in their systems that cause their customers to suffer loss.
