Ombud gets your cash back

2013-04-14 14:00

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R16.4m paid back to aggrieved banking customers, mainly from internet banking, credit card, debit order and insurance fraud.

The latest annual report from the ombudsman for banking services, which was released this week, showed that, of the 4?450 complaints received, 1?753 cases were found in favour of the customer and a total of R16.4?million was paid back to aggrieved banking customers.

The cases where the majority of rulings went in favour of consumers included complaints related to internet banking, credit cards, current accounts, debit orders and insurance.

But complaints concerning customers being victims of scams tended to favour banks, as customers were seen to be negligent in this regard.

The ombudsman, Clive Pillay, says last year saw a marked rise in the number of cases for the ombud, with the bulk of complaints coming from ATM transactions, with 2?000 such cases investigated. This was followed by internet banking, with a total of 1?160 files opened.

The ombud also raised concerns about the 8% increase in mobile phone banking fraud, as well as the general increase in fraud.

Although many cases of reported fraud were due to customer negligence, the ombud believes banks have a duty to ensure their customers enjoy a safe banking environment.

Advocate John Myburgh, the chairman of the board of the ombudsman for banking services, says: “There has never been a greater need for security and control in the banking environment, specifically on the digital highway.”

According to him, this need is not only due to the increase in internet-banking fraud, but because banks have a duty to commit to the code of banking practice, which calls for safe, secure and reliable banking and payment systems.

Furthermore, the Financial Services Board initiative, Treating Customers Fairly, requires banks to step up safeguards and controls to protect their clients.

Myburgh explains: “Security means more than identifying the risks and sanctioning the fraudsters.

“Solutions must be tailored to specific sectors and operations, and they must keep pace with the growing sophistication of attacks on banking systems.”

Case summaries

Lack of disclosure

1In a cellphone-fraud case, R60?000 was stolen from the complainant’s account using a cellphone facility for which he claimed he had not registered.

The bank maintained that the complainant disclosed his confidential cellphone banking details and that he had accepted the bank’s terms and conditions for using internet and cellphone banking.

The Ombudsman for Banking Services adjudicator held that the bank could not prove that it made the client aware that he was registering for both cellphone and internet banking when signing the terms and conditions, or that the details of the cellphone banking had been explained to him.

The complainant could not be held liable for a risk that he was unaware of, or a facility of which he was oblivious.

The bank refunded the complainant in full.

Bankfails to stop fraudulent debit orders

2The complainant noticed unauthorised debit order amounts and approached the bank.

The bank advised him to call the company that was making deductions, but he did not do so.

Only when he went back to the bank a year later, did they load a stop order on the account.

The ombud ruled that the bank’s actions were unreasonable as it should have applied a stop order immediately and should have found out whether the company had the authority to debt the account.

When the bank requested the mandate from the company, the contract was found to be fraudulent and, as a result, all the debit order deductions were invalid.

The company refunded the debits and the bank, at the ombud’s suggestion, offered a goodwill payment for failing to act timeously.

Bank shares credit card loss

3A client’s son had taken her credit card and had made unauthorised withdrawals.

Although the client had provided her son with her credit card details and was therefore liable for some of the loss, the ombud found that

the complainant could not be held liable for amounts exceeding her credit limit, which had been increased without her authorisation and was in fact in contravention of the National Credit Act.

Bank not liable for negligence

4A physiotherapist received a call from her patient’s father stating he had erroneously paid R25?000 into her account instead of the R450 consulting fee.

Seeing the funds reflected, the physiotherapist transferred the difference back. The next day, he phoned saying a further R25?000 had been paid to her in error.

Again she transferred the money back.

When it became apparent the payments were made via stolen cheques, the physiotherapist held the bank was liable as she was not informed she had a facility that allowed uncleared cheques to reflect. The bank was willing to refund 25%.

The adjudicator found that although the amounts clearly showed as deposits, the physiotherapist had not called the bank to query the transactions and had not waited for the cheques to clear.

Furthermore, the names of the depositor and the patient’s father were inconsistent. As the customer had been negligent, the ombud upheld the bank’s offerof a 25% refund.

Total amount recovered from banks by the OBS*

»?To find out more, or to lodge a complaint, contact the ombud on 0860?800?900 or

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