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ombudsman news

issue 26

March 2003

banking case round-up

This selection illustrates some of the complaints we have dealt with recently on a range of banking matters.

credit card - no authority to charge hire-car repair cost.

Ms B hired a car while she was on holiday in Kenya with her friend, Mr K. She used her credit card to pay the hire charges and, as she had no driving licence, she named Mr K as the driver on the hire agreement.

A couple of days into the holiday, Mr K had an accident, through his own fault, and damaged the car. Some weeks after they had returned to the UK, Ms B found that the car-hire company had charged £4,000 to her credit card, saying this was the cost of the repairs. Ms B queried this, saying that she had not authorised the charging of the repairs to her credit card, and that the amount claimed was excessive. However, the firm said that, in signing the car-hire agreement, Ms B had authorised the charge.

complaint upheld
We examined all the documentation, including the report of the damage to the car. We found that the car-hire agreement did not authorise the car-hire company to charge the cost of the repairs to the card. The firm should have checked this. And the amount charged was clearly excessive for the amount of damage recorded. We told the firm to re-credit Ms B's account. It was for the car-hire company to pursue her or Mr K direct for the cost of the repair.

credit card - unauthorised nightclub bills

Mr G visited a nightclub one evening while he was abroad on holiday. He remembered signing for two credit-card transactions that night - and giving one duplicate signature after being told that his signature for one of the transactions was too faint.

But when his credit-card statement arrived several weeks after his return home, it showed a total of ten transactions for that one evening at the nightclub. When he queried the transactions, the credit-card firm sent him copies of ten transaction slips from the nightclub. He disputed eight of the transactions but the firm refused to refund his account.

complaint upheld
We examined the transaction slips. It was apparent that they had all been filled out by the same member of the nightclub's staff. But there were considerable variations in the way in which the signature had been written. The slips were numbered, and almost all the numbers were in sequence. This suggested either that Mr G had been virtually the only customer paying by credit card that night, or that he had made ten separate transactions, one after the other. We thought both possibilities were unlikely.

We also noticed that the authorisation codes were not in the approved format and were out of sequence with the numbers on the slips. We concluded that Mr G had been the victim of a fraud by the nightclub's staff. We required the credit-card firm to refund the eight transactions, and to pay Mr G £250 compensation for the inconvenience it had caused by failing to acknowledge the discrepancies, even when Mr G challenged the transactions.

credit card - authorised nightclub bills

On the last night of Mr T's foreign holiday, he asked a taxi driver to recommend a nightclub. He arrived at the club around midnight and left at 6.00am, to catch a midday flight home. While he was at the club, it debited his credit card with nine transactions, totalling almost £1,000.

Mr T later said that he recalled arriving at the club and chatting to some "friendly young ladies", but that he had blacked out after his first drink. He subsequently came round but said that, apart from three brief incidents that he recalled very clearly, his memory of the rest of the evening was very hazy.

On his way to the airport, he realised with horror just how much the credit-card transactions added up to. He concluded that he had been the victim of fraud and thought that someone at the club must have drugged him. Because of his imminent departure, he did not report his concerns to the police at the time. But as soon as he returned to the UK he contacted the credit-card firm. When it refused to refund the disputed transactions, Mr T brought his complaint to us.

complaint rejected
The transaction slips were numbered but none of the numbers were in sequence and the disputed transactions had clearly taken place over a period of hours. Mr T appeared to have been given carbon copies of all the slips he had signed and he still had most of them. These factors together all suggested to us that the transactions were genuine.

If the club had tried to defraud him, as he claimed, we thought it unlikely that it would have done this by first drugging him (as he alleged) and by then carrying out a number of transactions on his credit card, spread over the course of six hours. And it seemed unlikely that it would have given him copies of the signed slips, all with an apparently genuine signature.

We concluded that Mr T had received the hospitality for which he had paid, and that this accounted for the haziness of his memory.

transfer abroad - the receiving bank's funds frozen by court order

Mr C asked the firm he banked with to transfer money to his elderly mother in the Balkans. The transfer was expected to take less than two weeks. But Mrs C had still not received the money a year later.

The firm established that the money had arrived at Mrs C's bank within three days. However, the assets of the Balkan bank had been frozen by a court order.

The firm offered to refund to Mr C the fee he had paid for the transfer. But it would not refund the amount he had transferred.

complaint settled
It was not the firm's fault that the money was frozen, and we agreed with the firm that there was no way in which it could have known about the court order. We explained the position to the lawyers who had taken out the court order against the Balkan bank, and they arranged for the sum involved to be released to Mrs C.

Walter Merricks, chief ombudsman

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.