A Nottingham County Court judge has rejected a consumer’s complaint that over £2,000 was taken from his Halifax account without his permission.
In the case of Job v Halifax plc, Judge Inglis ruled that it would be fair for the court to infer that Alain Job’s card and PIN had not been used fraudulently by a third party.
Background to the case
Alain Job had a total of £2,100 withdrawn from his account in February 2006 via two cash machines in Reading. Seven withdrawals were made in total.
Mr Job said he did not make the withdrawals, and he did not authorize any third party to make the withdrawals.
He complained to the bank, denying that he had made or authorized the withdrawals. He further denied that his card had ever left his possession or that he had allowed anyone else to know his PIN. His claim was rejected by Halifax.
Mr Job also complained to the Financial Ombudsman Service, which rejected his claim.
He began legal proceedings to recover the money in February 2007.
The bank relied on the electronic signature of Mr Job, so it had to prove:
- That cash in respect of each of the transactions was physically withdrawn from the machines in question.
- Whether the actual card issued to Mr Job was used in each transaction.
- That Mr Job or a person authorised by him concluded the transactions, or that his carelessness enabled an unauthorised person to do so.
Halifax produced in evidence a print-out of internal logging software, showing that both the card and the correct PIN had been used.
Mr Job’s argument
Mr Job’s counsel, Stephen Mason, argued that even if the correct PIN was entered into the machine, it does not follow that Mr Job or a person authorised by Mr Job entered the PIN, and that a perfect forgery is nonetheless a forgery.
Furthermore, the bank requires a PIN to be used, even though the use of a PIN prevents the bank from distinguishing a forged signature from a perfect signature as no actual signature is required.
Mr Mason also argued that the bank failed to produce primary sources of evidence, including:
- The card. This was not available, because it had been destroyed at the request of the bank. Had this been available to test, Mr Mason argued, it might have been possible to determine whether Mr Job’s actual card was used in the six transactions that were in dispute.
- The ATM receipts. The ATM receipts might have conformed that cash was physically dispensed, thus eliminating the possibility that an insider withdrew the money.
- The Authorization Request Cryptogram (ARCQ) and Authorization Response Cryptogram (ARPC). Every time a chip and pin card is inserted into an ATM, an ARQC is a generated and the ARPC is generated by the issuer in response to the ARQC. This response includes the decision by the bank on the authorization request and is sent back to the card for validation before the transaction is completed. Mr Mason stated that the bank destroyed this evidence.
The judge’s ruling in the case
The judge ruled against Mr Job and rejected his argument that he had the card at all times and had never compromised the PIN.
However, the judge did not reach any conclusion as to how the withdrawals were made, only that:
- they were made by him, or
- by someone authorised by him, or
- by gross negligence in that he had enabled someone else to use the card and the third party knew the PIN.
The judge rejected the argument that the bank should prove each step in the process (cash withdrawn from the ATM and evidence of the ARQC).
In the absence of any evidence of systems failure, the judge decided that the transactions could be taken at face value, and that it was open to the court to infer that these transactions took place using Mr Job’s card and PIN.
Take action if you’re a victim of fraud
While Mr Job will be very disappointed by the outcome of his case, consumers who think they have fallen victim to card fraud should still take action.
Complain to your bank in the first instance, asking it to investigate and to refund the disputed amounts. If you’re not happy with the bank’s response, you can take the matter to the Financial Ombudsman Service free of charge. This route is available to you once you’ve reached stalemate with your bank or when eight weeks have passed since your original complaint, whichever is the sooner.
Even if the FOS rejects your complaint, you still have the option of taking the matter to court. However, if you lose it is likely that you will have to pay for this course of action so it’s vital to take expert advice. Your local Citizens Advice Bureau may be able to help.
Mr Job’s legal counsel, Stephen Mason, is also keen to hear from consumers who think they are victims of chip and PIN crime, as well as from ATM and PIN experts.
Which? calls for more detailed guidance
When the Financial Services Authority (FSA) takes over retail banking regulation this November, Which? expects it to provide more detailed guidance on the evidence that should be provided by banks in card fraud cases.
We will be making representations to the FSA as it develops its new role in the coming months, ensuring that the process is both fair and fully transparent for consumers.
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