Victim of armed robbery must pay overdrawn amount to bank

Published Apr 25, 2015

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A man who was held up and forced to hand over his bank card and PIN will have to repay R93 000 withdrawn from his overdraft facility, after the Ombudsman for Banking Services ruled against him.

This is one of the cases published in the ombudsman’s annual report for 2014, which was released last week. The cases indicate how the ombudsman, Clive Pillay, may address similar complaints in future.

Immediately after his ordeal, the complainant went to a branch of his bank to stop his cards. Although his account had a balance of R800 at the time, the criminals stole R93 000 from his account.

The complainant wanted his bank to compensate him and to refund the related fees and charges. But the bank said it was not liable for the loss, because the transactions were performed using the complainant’s card and PIN, and they occurred before the incident was reported to the bank. The ombudsman received proof from the bank that supported this.

The complainant said that some of the transactions reflected on his statement as having happened after he had stopped the card. However, point-of-sale transactions reflect on your statement only once the merchant has processed or “banked” them.

The ombudsman ruled that there was nothing the bank could have done to prevent the transactions before the cards had been stopped, and, therefore, the bank could not be held liable.

The ombudsman’s principle: limit your exposure to losses by keeping your overdraft facility to a minimum. Also be aware of a “shadow limit”. A shadow limit can apply even if you do not have an overdraft. It can be described as a “safety net”, given in good faith, that applies when you don’t have sufficient funds in your account. The bank knows you are good for the overdrawn amount, because you have a good credit record.

Other cases published in the ombudsman’s latest annual report are:

Money stolen while on hold

While trying to transact at an ATM, the complainant’s card was apparently retained by the ATM. Thereafter, R5 000 was withdrawn from her account.

The complainant claimed that she called the bank before the unauthorised transaction had taken place to notify the bank that her card had been retained by the ATM, and she therefore wanted the bank to refund the R5 000.

The bank provided proof that the complainant’s card and PIN had been used for the transaction. The bank initially claimed that her card had been stopped after the fraudulent transaction occurred.

The complainant provided the ombudsman with a reference number for the calls she logged with the bank, but she was unable to provide itemised billing to prove when she had contacted the bank.

On further investigation by the bank, it found that the withdrawal occurred while the customer was on the line waiting to get through to its call centre.

The ATM had not, in fact, retained her card. The criminals had managed to obtain the card, by causing it to get stuck in the ATM, only to retrieve it later. They had obtained her PIN by “shoulder surfing” (someone stood behind her and looked over her shoulder while she entered her PIN), or with a camera hidden on or near the ATM.

The complainant had done what she could to mitigate her loss. Therefore, the ombudsman recommended that the bank refund the R5 000.

The ombudsman’s principle: once a card is stopped, the bank is liable for any subsequent unauthorised transactions. When you contact your bank to stop your card or report unauthorised transactions, keep the reference numbers and a log of your phone calls.

Risk of loss without a receipt

On noticing that a number of unauthorised ATM withdrawals had been made from his account, the complainant immediately contacted his bank and cancelled his card.

He said that he had gone on holiday earlier in the month and had chosen not to receive a receipt each time he transacted. The complainant did not subscribe to receiving SMS notifications from his bank of activity on his account.

The complainant asked that the bank reimburse him R14 700.

The bank said that the complainant’s card had been cloned, but it decided to reimburse him only 50 percent of his loss, because, if the complainant had chosen to be issued with receipts, it would have enabled him to mitigate his loss.

However, there was no proof that the complainant had compromised his card and PIN, and, in such cases, the ombudsman’s principle is that the consumer should be reimbursed in full.

The ombudsman’s office concluded that if the bank had expected the complainant to assume the risk of loss if he did not choose to receive a transaction receipt, this should have been made clear in its contract with him or at the ATM. The bank accepted this assessment and reimbursed the complainant in full.

The ombudsman’s principle: if you have the option of being issued with a receipt and you decline, you cannot be held responsible for losses unless there is a clause in your contract to the contrary, or your liability is made clear at the ATM.

Retrenchment claim

The complainant took out a personal loan with her bank in 2011. Apart from the monthly instalment, she paid a premium towards credit life insurance.

In 2013, she lost her job and lodged a retrenchment claim.

The bank rejected her claim, because she had been employed on a fixed-term contract. But the complainant said the bank had known this when she took out the policy and she asked that it write off the balance of the loan and compensate her for distress and inconvenience.

The bank refused, claiming that the policy did not cover employees on fixed-term contracts.

The ombudsman found that, when the policy was issued, the bank had been fully aware that the complainant was on a fixed-term employment contract.

He recommended that the bank honour the policy, or refund the premiums, because it had erred in selling the product to the complainant. The policy stated: “In the case of retrenchment, we will pay your instalment for six months.”

The bank agreed to uphold the retrenchment claim of R15 600. In addition, it wrote off the arrears amount owing (the complainant did not meet her payment obligations for two months after being retrenched) and paid her R2 000 for distress and inconvenience.

The ombudsman’s principle: all the parties to an agreement are bound by it.

* You can contact the office of the Ombudsman for Banking Services as follows: sharecall 0860 800 900; fax 011 483 3212; PO Box 87056, Houghton, 2014; or email [email protected]

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