ATM Card swapping cases keep Banking Ombud busy

The various ombud’s offices - covering insurance, banking, motoring, income tax and consumer goods and services transactions - offer a free dispute adjudication service, are staffed by legally qualified people, and come to their decisions without bias towards either consumers or the industry.

 

In the case of the Ombudsman for Banking Services, which released its 2015 report yesterday,  in the 4186 cases dealt with last year,  the Ombud found in favour of the banks in a whopping  73% of cases - 7% more than in 2014.

 

Standard Bank cases dominated - 1530 - but the Ombud was at pains to point out that the number of files operand per bank is not necessarily indicative of a bank’s complaints handling performance or its performance in general, as banks vary considerably in size, client profile and product mix.

 

Once again, ATM-related complaints were by far the biggest category at 37% of all complaints.

 

There are three reasons for that, according to Banking Services Ombudsman Clive Pillay: more people than ever before are using ATMs to transact; many users of ATMs are still too trusting and take advice or assistance from strangers, and consumers across the board fall prey to ATM scams - “it cuts across all socio-economic boundaries”.

 

Of those 1218 ATM cases, more than half - 55% involved card swapping. That’s when a person is distracted at an ATM by someone who’s managed to get close enough to see them entering their PIN, and then been duped into taking a card that’s not theirs, leaving the fraudster with their card, and the means to raid their account.


Pillay gave me a typical example…

 

“About a week ago, a project manager from the UK living and working in Cape Town, was scammed  at an ATM machine. A gentleman was standing next to her with a bundle of cash in his hand, as if he had just withdrawn the money. He dropped a R200 note; her attention was distracted by looking at the note on the floor and an accomplice then removed her card from the slot. They had already shoulder surfed her and so they knew the PIN and were able then to withdraw money from her account.”

 

Interestingly, in 80% of those ATM cases, the Ombud found in favour of the bank, because if you compromise your PIN by allowing someone to get close enough to see you entering, or allow someone to “help” you at the ATM, the bank won’t be held responsible for any loss you suffer as a result.

 

And for those who choose “easy” PiNS so they can remember them, here’s a cautionary tale, which features in the annual report, along with several other case studies.

 

The complainant noticed that her bank card and driver’s licence were missing. Then she discovered that fraudulent withdrawals from her bank account had happened in places she’d never visited.

She swore she’d never revealed her PIN to anyone, but did reveal to the Ombud’s office that her PIN was the first five digits of her ID number.

And so the Ombud ruled against her, saying she was negligent in choosing that PIN. So never go with an “obvious” PIN.

 

And here’s an interesting scenario, which also features in the Ombud’s report.

 

A bank customer stupidly gave his user name and password to a bank employee to make legitimate transfers and payments on his behalf.  That employee then stole thousands of Rand from his account over the next five months.

 

He held the bank liable for the fraudulent transactions, saying he’d trusted the bank official and hadn’t authorised those withdrawals. When he got no joy - or any refunds - from the bank, he complained to the Ombudsman.

 

But the Ombud found that the bank was not vicariously liable as the employee was not acting in the scope of his employment, but rather promoting his own interests.

I must say, that surprised me.

 

Other big complaint categories were Internet banking. Apparently a lot of people are still falling for phishing scams - those fake emails which look like they come from a bank, asking people to provide their banking details and passwords.

 

Home loan complaints also took up a lot of the Ombud’s time in 2015, particularly home repossession-related complaints, which increases substantially over the previous year - a sign of people being severely debt stressed.

 

At the press conference after the launch of the annual report, I asked Pillay about a scenario I deal with fairly often - the finger trouble internet banking one.

A intends to pay B via EFT, but gets the number wrong and pays C instead. And it doesn’t matter if the account name is not a match, by the way - if the account number is valid, the transfer happens.

And often the unintentional recipient - C - regards the mistaken windfall as fate or a gift from God, and won’t give it back.

So can the bank simply take back the money? Well, yes and no, Pillay said.


The Ombud’s advice to the banks in such cases, is to put the money concerned into a suspense account so that C can’t use the money until the matter can be resolved.

 

Of course, it’s far easier to double and triple check account numbers before making a transfer to avoid unintentional gifting.

 

Ombudsman for Banking Service: www.obssa.co.za