March 29th, 2010 at 15:12 UTC by Ross Anderson
I’ve written enough over the years about people who tried and failed to get money back from banks after seeing transactions on their accounts that they did not recognise. Now I’ve had to go through the process myself.
I got a refund from the NatWest after a dodgy debit appeared on the credit card my wife uses. The bank’s dispute resolution mechanism turned out to be unserviceable, but we got the money back promptly when we sued them in the small claims court. The story is, I believe, an instructive one for people interested in bank security or payment systems regulation.
I have put online the documents which tell the story. A debit of £126.51 appeared last June from “Ian Travel Services” about which there are many complaints online. My wife phoned the bank and didn’t get anywhere. So I wrote to them asking to reverse the transaction or provide evidence that it was made with our mandate.
The bank insisted that I fill out two declarations – one saying I didn’t recognise the transaction and the second saying that I hadn’t made it. When I replied that only the first of these was true and demanded evidence that the debit was made by myself or my wife, in line with the Distance Selling Directive if it were by a card-not-present transaction and otherwise by providing the relevant log entries, the reply was that MasterCard required them to obtain duly completed and signed declaration forms although “these are not legally binding” (an assertion that appears to be false). The bank said it had nonetheless asked for a copy of the voucher “through the retailers acquiring bank”.
Two months later, they got back to me and said that “the only information the retailer provided us with is that the debit relates to a transaction made through hotels.com”. I replied to them that we had received a notification from hotels.com that another of our credit cards had been compromised by the loss of a laptop by their auditors and asserted my rights under the Distance Selling Directive.
The following month they wrote back saying that “we are governed by MasterCard International, who are the governing body for credit card transactions” and had to abide by their rules, under which our complaint was now out of time. This is nonsense on stilts; my contract is with the bank, who may not debit my account without my mandate, and if the bank enters into a contract with MasterCard that prevents it from discharging its obligations to me then that’s the bank’s problem, not mine. The bank suggested i get legal advice, or go to the Citizens’ Advice Bureau, Local Trading Standards or the Financial Ombudsman Service. Now I documented the failings of the Ombudsman in an earlier post, so I decided to go straight to the heart of the matter and sue the bank in the small claims court.
The bank settled at once.
This may be entirely rational behaviour on the bank’s part. If it can fob off most complainants with tiresome call-centre procedures, or tell them they’re out of time, or pass them off on Citizen’s Advice, then it will only have to refund the minority who ignore this flummery and go to court. Even then, the bank only has to pay an extra £25 for the court fee. So now you know – suing the bank is the fastest, simplest and least-hassle way of getting your money back. I’ve come across the same phenomenon elsewhere: when Easyjet cancelled a flight, the only way I could get the compensation to which EU law entitles me was by suing them, and then getting the bailiffs to enforce the judgement. (The bailiff told me on the phone that she enforces lots of these.) Another Easyjet customer writes: suing in the County Court for small claims should be part of citizenship lessons for teenagers.
So it seems that the optimal bank complaint procedure is one letter, then a writ. But do take care that your case remains on the small claims track. In the Alain Job case, the bank persuaded the judge to move the case from the small claims track to the fast track, the effect of which was that Alain was ordered to pay the bank £15,000 in costs after he lost. If a bank tries that on you, you’d maybe better tell the judge that you’d have to abandon the case and thus your human rights would be infringed. But IANAL, this isn’t legal advice, and your mileage (as they say) may vary.