Last year, the Ombudsman for Banking Service received 205 more internet banking complaints than in the previous year. Most of these complaints related to cellphone or app banking, which increased by seven percent. This is indicative of a need for greater security, the ombudsman’s annual report for 2016 says.
Ombudsman Clive Pillay reports that only 22 percent of internet banking complaints were found in favour of the consumer, “which underlines the ongoing need for consumer education”, he says. “Our demographic statistics reveal that most of those who fall prey to technology-based scams are consumers older than 40. Those younger than 30 are generally tech savvy and less susceptible to suspicious practices.”
ATM-related complaints remained the biggest category of complaints, in spite of a drop in the number of these complaints (from 1 654 in 2015 to 1 268 last year). The ombudsman says he hopes that the decline in the number of ATM-related complaints is an indication that card users are becoming more vigilant when transacting in a public place.
“As with internet complaints, most awards were made to the banks, as the consumer was found to be at fault, again reflecting a lack of awareness of the risks of sharing PINs or accepting help at a machine,” the annual report states.
There was a marked increase in credit card complaints, from 390 in 2015 to 505 in 2016.
“Some 36 percent of all credit card cases were charge-back disputes, where some element of fraud was suspected.”
Pillay says that more than half of all cases handled in 2016 were fraud-related complaints. “In these complaints, the complainant is overwhelmingly the victim of a scam. There is no maladministration on the part of the bank,” Pillay says.
Overall, the ombudsman’s office opened 5 219 cases during 2016 – a four percent increase on the previous year – and only 24 percent of complaints went the way of the consumer. The OBS’s annual report says his office recovered R15 million from the banks for consumers, which is 50 percent more than in 2015.
The banking ombudsman’s office closed 96 percent of cases within four months, which is a small increase (2.1 percent) on 2015, and the average number of days to close a file dropped from 61 to 52.
CASE STUDIES FROM REPORT
The ombudsman for banking found in favour of consumers in only 24 percent of cases handled by his office last year. And if the case studies carried in the ombud’s latest annual report are anything to go by, some complainants are inclined to try their luck.
Fall for a con, pay the price
The complainant’s emails were intercepted by a fraudster, who contacted the complainant purporting to be a customer.
The fraudster informed the complainant that there had been a change in his banking details and instructed him to pay the funds into the new bank account.
The complainant duly paid the sum of R283 000-odd into the new account. Later, he realised he had been deceived and contacted his bank, as well as the beneficiary bank, to report the fraud.
The complainant told the ombudsman’s office that he was informed by the bank consultant who assisted him that when the latter contacted the beneficiary bank, the funds were still in that account and that the account had been placed on hold.
The beneficiary bank denied advising the bank consultant that the funds were still in the account and claimed that the funds had been withdrawn by the time the fraud was reported.
The ombudsman’s office asked for a copy of the beneficiary bank’s statements, which confirmed that all the funds had been withdrawn from the account by the time the bank became aware of the fraud.
The ombudsman’s office found that, even if the bank consultant had misled the complainant into believing that the funds were still available at the beneficiary bank, it had not caused or contributed to the loss suffered by the complainant, as the funds had been withdrawn in full before the beneficiary bank was informed of the fraud. The office found that the complainant’s claim was against the beneficiary account holder, not the bank.
Reckless borrower alleged reckless lending
The complainant fell into arrears with a home loan held at his bank. His family members helped him to settle the account, which was then closed.
Subsequently, the complainant obtained three credit facilities with the same bank. He once again experienced financial difficulties, and his family again helped to settle the outstanding balances and close the accounts.
The complainant lodged a dispute with his bank, alleging that his bank granted the three credit facilities recklessly, being well aware of his poor payment history. He wanted his bank to repay the money paid by his family to settle the debt.
The bank advised that, prior to extending the credit facilities to the complainant, it had conducted an affordability assessment as required by the National Credit Act (NCA). The ombudsman’s office considered the information provided by the bank and concluded that there was no evidence to support a finding that the credit facilities had been granted recklessly by the bank.
The remedy provided by the NCA in instances of reckless lending is that a court or tribunal may set aside all or part of the consumer’s rights and obligations under the agreement. This remedy did not apply in this instance, as the finding was that the credit had not been granted recklessly, and in any event, as the accounts were settled and closed, there was no legal basis for recommending that the bank reimburse the complainant.
You won’t get away with unjust enrichment
The complainant applied for a home loan, which was granted in the amount of R335 000. Subsequently, an amount of R41 175 was credited to the account, which the complainant withdrew by making use of the access bond facility.
The bank later erroneously credited the account with a second sum of R41 175 and, again, the complainant used the funds. The bank, realising its error, reversed the erroneous payment, resulting in the loan exceeding the registered limit.
The complainant wanted the bank to write off the amount that was credited to the bond account in error.
The ombudsman says that while the bank could not simply debit the bond account without the account holder’s permission, he could not ignore the fact that the complainant received and used the funds that were credited to the bond account in error. Had the bank not reversed the credit, the complainant would have been unjustly enriched. If the bank were to re-credit the complainant’s account, he would be unjustly enriched and the bank would have a legal claim against him for return of the funds.