Critical Consumer Pat Sidley
CONSUMERS may have noticed a campaign directed at making them “more secure” at automatic teller machines (ATMs). The campaign is cunningly framed to make consumers believe that all the ATM fraud, theft and related crime in general is the consumers’ own fault. Now that the banks are kindly giving its consumers information on how to combat ATM crime, the banks no longer have any vestige of responsibility for the problem.
This critical consumer would like to say that this action on behalf of the whole banking industry avoids the issue. But to use stronger language may land me in the type of hot water The Star and its consumer reporter wound up in not long ago for expressing the widely held perception among consumers that the banks are in some way responsible for the problems they face at ATMs.
The industry came down on The Star like the proverbial ton of bricks, claiming a lack of evidence to back up that view, and Star readers were afterwards treated to both a retraction and lengthy pieces by the banking industry. A more appropriate response might have been for the banks to look at why consumers feel banks should shoulder more of the responsibility.
In other countries, banks simply have to.
According to an industry spokesman who appeared on Good Morning South Africa this week, South Africa has its own set of ATM crimes, in addition to the type found abroad.
The industry acts as a cartel, always a factor against consumer interests. Attempts to get answers from one bank this week elicited the response that it was an “industry” question and should be answered by the Council of South African Banks — even though several of the questions concerned the actions of the bank telephoned.
The invention of ATMs was done less for consumer convenience than to give banks the chance to cut back on teller staff. South African consumers are, in fact, severely prejudiced by how the law works with regard to ATMs.
There are basically two types of law which lay the basis from which the banks operate. A contract is the basis of the arrangement whereby a consumer gets a card from a bank and is then enabled by the bank to use it. That contract generally states that whatever happens to the customer’s account with the card and the personal identification number (the PIN number), it is the responsibility of the account holder. In other words, if your card and/or your PIN is used, or even if staff at the bank cause money to be withdrawn on your account, you are liable, no matter the circumstances.
According to sections of our common law, banks owe a duty of care to customers. But the extent of that care is not prescribed by statutory law and consumers can only rely on a very vague concept of what a judge will regard as “reasonable care”. And judges in this country have not traditionally stepped out in favour of consumer rights.
In all disputed cases, the customer has to prove that he or she is right and the bank is wrong.
One way around this, suggests Unisa’s professor of mercantile law, Coenraad Visser, is to introduce specific legislation which would govern both the terms of contracts and whether the contracts in question are fair or unfair (the United Kingdom has such a law). Another way would be to legislate specific areas in which banks would have to shoulder some of the responsibility. Such laws exist in the United States.
At least one member of parliament would be interested in seeing such legislation. The Inkatha Freedom Party’s Suzanne Vos said this week she would like to take the issue up in parliament with a view to making banks more responsive to consumer needs.
Banks in this country are similar to those in the UK — and there, according to the Consumer Association’s Which? magazine, banks maintain that if the card is kept safe and the PIN number secret, the account will be secure. Sound familiar?
But in two separate articles this year, the magazine has found this claim to be wanting.
In a November investigation Which? tried unsuccessfully to crack a new security device placed inside the magnetic strips on the cards on certain banks. However, the magazine says banks which did not place the new device in their strips are vulnerable to ATM fraud.
In an earlier article the magazine cites several methods by which ATMs misfire on customers’ accounts. Banks, they say, concede that mechanical failure of a cash machine can lead to the dispensing of incorrect amounts of cash.
In the UK last year some R15-million was reported lost through cash machine fraud. Although this amount in UK terms was said to be small, the magazine states that it could be under-reported as it relies on consumers seeing the withdrawals on their statements.
It reports a couple of cases of fraud by bank staff — the issue over which The Star’s consumer reporter came to legal blows with the bank. Which? then states: “Banks are reluctant to discuss the problem of fraud by their staff, so it is impossible to know how many other cases there have been.”
Consumers here who are being told to memorise their numbers, hide their cards and take various other sensible precautions — which most take already — would do well to note the rights of their counterparts in the UK.
UK consumers are only liable for the first R250 taken from an account before the bank is told the card is stolen. After the bank has been told the card is stolen, customers are not liable for any part of the transactions that follow. That regulation has been around since cards were introduced.
So when you next see the banks’ ATM advertisements, take the advice they offer and then, if you can find your member of parliament or your member of the provincial legislature dealing with consumer affairs, explain why legislation is needed to push banks into greater responsiveness to consumer needs.
There is one other sensible precaution you may consider. Take your card into the bank and cut it up in front of the manager. Confirm this in writing and check statements regularly to ensure nobody is withdrawing money in your name anyway.
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