Card's terms and conditions put loss squarely on bank

Financial abuse of the elderly,
Gladys, an elderly woman, used her debit card to buy groceries at her local supermarket. Two days later, she was about to go shopping again when she discovered that her wallet, with the debit card, was missing. After searching her home, Gladys went to her local branch and reported the loss. The bank told her that $7,000 had been withdrawn at ATMs and through eftpos transactions during the previous two days, leaving her with a balance of $2,000. It said it could do nothing for her, and she should lodge a complaint with the police.
September 2004

Our investigation

Gladys’ son-in-law, Tony, complained to us on her behalf. Tony said that there was no evidence to suggest Gladys had breached the terms and conditions of her card, and the bank should reimburse her for her loss. Tony also complained about the bank's service. Gladys was obviously distressed, and the bank officer had not advised her to complete a written complaint about the matter. Nor did the bank conduct any real investigation. She had been left with the impression that the loss was simply her bad luck, and the bank had no responsibility in the matter.  In failing to tell Gladys about its complaints procedure, the bank had breached its obligations under the Code of Banking Practice.

The bank's report concluded that Gladys had almost certainly been “shoulder-surfed” when she used her card at the supermarket; that is, the thief had looked over her shoulder and noted her PIN as she entered it at a terminal. The thief had then stolen Gladys’ wallet, possibly while she was loading the groceries into her car. The bank said it declined to reimburse Gladys because it was not at fault for her loss.

We had a different view. Like Tony, we found nothing to suggest Gladys had breached the terms and conditions of her card, either by being careless with the card or by failing to take adequate care to prevent disclosure of her PIN. She also reported the loss as soon as she became aware of it. The card's terms and conditions therefore required the bank to reimburse her.

We also found that the bank had done very little to help Gladys when it learned of the theft. The bank officer had not told Gladys about the bank's internal complaints process or about other steps she could take to recover her loss, and this added to the inevitable stress and anxiety of losing such a large sum of money.

We proposed that the bank reimburse Gladys for the full $7,000 (less the standard maximum customer liability of $50) and pay $250 as compensation for inconvenience. 


Gladys accepted the proposal, and the complaint was settled.


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