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Bank card fraud victims could face refund delays
Sunday, August 24, 2008
Payments group claims data protection law prevents naming of shops and restaurants, reports Emma Kennedy.

It was a bad week for retailers, already suffering from a slowdown in consumer spending with the downturn in the economy. Consumer confidence was dealt another blow with the news that thousands of people around the country had been the victims of credit and debit card scammers.

Retailers and restaurants were targeted in ‘skimming’ operations, in which fraudsters used bogus card readers to copy cardholders’ details.

The devices were installed by a gang pretending to do maintenance work for banks. By copying card details from genuine transactions, they created cards which could be used in countries that have not yet moved to chip-and-pin technology -w here the card user must enter a four-digit personal identification number.

The Garda Bureau of Fraud Investigation has seized a number of fake chip-and-pin devices and is reviewing CCTV footage as it continues its investigation.

However, consumer representative groups said that consumers had been given little information about the scams, and called for a list of the retailers affected to be published.

Dermott Jewell, chief executive of the Consumers’ Association of Ireland (CAI) said that banks had failed to respond adequately to the situation and the lack of information was adding to the problem. It has also emerged that consumers affected could face delays in receiving refunds.

‘‘Consumers are very frustrated. They don’t know how or when this happened and how can they take appropriate precautions if they are not given full details,” he said.

‘‘They pay a fee for the card. They abide by the rules and yet still their trust is broken.”

However, the representative body for the payments industry, the Irish Payment Services Organisation (IPSO), rejected Jewell’s criticism and claimed that consumer confidence had not been shaken. Jennifer Chamberlain, marketing manager of IPSO, said that information about the scams had been relayed to the media and the general public as it happened.

She said that the exact locations and retailers in which the incidents occurred could not be made widely available due to data protection issues. ‘‘Customers can rest assured that issuing banks are contacting affected cardholders proactively,” Chamberlain said.

She said there was no cause for concern for consumers using credit and debit cards, since fraudulent transactions would be ‘‘obvious’’ to issuers. She said consumers would be refunded by their bank or card company in cases where fraud was proven.

The Irish Banking Federation (IBF) echoed the message from the IPSO and moved to assure consumers that they would not be out of pocket in the event of fraud.

‘‘Cardholders should exercise caution at all times when using their cards,” said a spokeswoman for the IBF. ‘‘Cardholders who are the innocent victims of fraud should not find themselves at a financial loss at the end of the day.”

IPSO said it was working closely with the gardaí, banks, card issuers, terminal manufacturers and other bodies in the banking industry to ‘‘examine the details of this fraud so that necessary action can be taken to minimise its impact and to prevent it, going forward’’.

As the investigation into the matter continues, individual banks were reluctant to reveal the extent to which last week’s events affected them.

Bank of Ireland said about 3,100 of its debit and credit card holders had been affected by the frauds. A spokeswoman for the bank said the main victims were debit card holders, but some credit card customers were also affected.

AIB said that some of its customers had also been affected. Ulster Bank said that only a small number of its customers had been victims of the fraudsters.

A spokesman for Halifax said: ‘‘I can’t provide you with exact numbers, but it is a very small number indeed, relative to our customer base.”

National Irish Bank said it could not divulge any details of the incident as it was the subject of an ongoing garda investigation. However a bank spokesman conceded that the scam appeared to have affected debit and credit card holders.

A spokeswoman for Permanent TSB said the bank was working closely with IPSO and the Garda Bureau of Fraud Investigation, but did not give any details of the number of customers affected.

Each card issuer took precautions to prevent further fraud. For example, Halifax decided to cancel some cards that were not affected by the scams.

‘‘In addition to a very small number of cards that have been the subject of fraudulent transactions, we have cancelled and reissued a number of cards purely as a precautionary measure,” a bank spokesman said.

When news of the scam broke, Bank of Ireland initially limited cash withdrawals overseas, but it has since lifted this restriction. All the banks said they had been in touch with affected customers and that they had tried to resolve the matter as quickly as possible.

A Bank of Ireland spokeswoman said the bank was making direct contact with affected customers and had issued new cards to them. She recommended that customers contact their branch if they noticed any suspicious transactions on their account, and should also change their personal identification number as an interim measure.

Despite the criticisms from the CAI, the main message from banks was that consumers should not worry as they would not foot the bill for fraud. A spokeswoman for EBS said: ‘‘If fraudulent activity has been identified on the card, the customer is not liable.”

A Halifax spokesman said the bank would investigate the liability for any fraudulent transactions, but said customers would not be liable for any fraud carried out by a third party. He said that customers who had been defrauded would receive all their money back as soon as possible, depending on the case.

The Bank of Ireland spokeswoman said: ‘‘Bank of Ireland reimburses customer losses as a result of ATM or card fraud where the customer has conformed to the terms and conditions of the card, such as not handing over the pin to another party and so forth.”

However, consumers affected by recent events may not receive immediate refunds. ‘‘We do have to complete an investigative process and this can take five to ten days approximately,” she said. ‘‘If a customer is without any funds, individual branches will assist them with interim access to cash with an increased or new overdraft.”

AIB said there was a ten-day turnaround on issuing refunds, once signed documentation was received from the customer. All banks urged customers to be vigilant when using their cards and to take precautions to protect the security of their accounts.

However, the CAI’s Jewell said customers were taking all the precautions advised and using the system in good faith, only to have their trust breached and inadequate protection provided.

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