Separating their accounts
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On 27 September 2004, Ms M and Mr Y attended the local branch of their bank and were assisted by a bank officer who prepared new authorities for the business accounts, which Ms M and Mr Y signed. The bank officer was not authorised to open a new personal account for Ms M, so Ms M opted to keep the joint personal account open.
On 13 October 2004, Ms M removed Mr Y’s internet banking access to her business account. On 18 October 2004, Ms M closed the joint personal account and opened a new personal account in her name.
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Mr Y transfers $19,000 from Ms M’s credit card to his account
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On 7 December 2004, a signature-based cash advance for $19,000 was made from Ms M’s credit card account at one of the bank’s branches. The transaction was made by Mr Y using his secondary credit card and the funds were transferred into an account held in his name.
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Ms M disputes liability for Mr Y’s withdrawal
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Ms M disputed her liability for the $19,000 cash advance. She said that when she and Mr Y went to the bank on 27 September 2004 she instructed the bank officer to make the necessary arrangements to ensure Mr Y could no longer draw on her accounts. Ms M believed that she did all that she could have, so as to ensure that Mr Y’s authority as secondary cardholder on the credit card account, was revoked. Ms M said that the bank was under an obligation from this time to ensure that the secondary credit card was stopped. Ms M believed that the bank should refund the $19,000 advanced from her credit card account because it had not carried out her instructions properly.
Ms M also said that she saw the bank officer take Mr Y’s credit card from him and that she was therefore led to believe by the bank that the card had been surrendered and there was nothing further she was required to do regarding the cancellation of the card.
Ms M denied the bank’s assertions that the bank officer offered her the use of the branch courtesy phone to contact the Card Services area and cancel Mr Y’s secondary credit card, or that she had told the bank officer that she would cancel the secondary credit card at a later date.
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The bank’s response
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The bank officer provided a statement regarding her recollection of events on 27 September 2004. The bank officer said that before Ms M left the branch, she reminded Ms M that Mr Y held the secondary credit card and she recommended to her that she cancel this card.
The bank officer said that Mr Y withdrew the secondary credit card from his wallet to refer to it and to confirm he held it, but he then put it back in his wallet. He did not hand the card to the bank officer. Ms M did not ask Mr Y to hand the card to the bank officer and nor did she ask him to destroy the card.
The bank officer said that she informed Ms M that she would need to call Card Services to cancel the secondary credit card and that she could use the branch courtesy phone. The bank officer said that she made this suggestion as she was not authorised to handle card cancellation requests and there were no staff in the branch at the time who were authorised to deal with such a request.
The bank officer said that Ms M informed her that she understood that she needed to cancel Mr Y’s secondary credit card but that she would call Card Services at a later date to do so.
The bank said that because Ms M failed to contact Card Services to request cancellation of the secondary credit card, Mr Y was authorised to use the card and to make the $19,000 cash advance. In accordance with terms and conditions of the credit card, Ms M, as the primary cardholder, was liable for the disputed cash advance.
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BFSO’s investigation
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The file was investigated by a case manager. The case manager had to make an assessment of what had occurred at the branch on 27 September 2004.
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What happened at the branch on 27 September 2004?
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The case manager concluded that the available information did not support Ms M’s assertion that she was intent on leaving the branch on 27 September 2004 with Mr Y’s access to all of her accounts having been fully removed. This is because:
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- Ms M chose not to have the bank officer close the jointly held personal account on 27 September 2004 because the bank officer was not authorised to open a new personal account for her, in her own name, and there was no one available in the branch to do this;
- A staff member authorised to open new accounts was available in the branch from 5 October 2004 but Ms M did not make arrangements to close the jointly held personal account and open a new account in her own name until 18 October 2004; and
- While Ms M removed Mr Y from the operating authority on her business account on 27 September 2004, she did not cancel his internet banking access to that account until 13 October 2005.
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Did the bank officer give the impression she had taken the credit card from Mr Y?
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Ms M said that she was led to believe by the bank officer that the secondary card had been surrendered to the bank because she saw Mr Y give the card to the bank officer. However, in order for the bank to have engendered a belief in Ms M that the secondary credit card had been surrendered, Ms M was required to show that the bank officer had said or done something that created such an impression in her mind.
Ms M’s honest but mistaken belief that the card had been surrendered to the bank officer was simply based on what she thought she had seen and there was no information to show that the bank had misled her.
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Did the bank officer inform Ms M that she must call card services to cancel the credit card?
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The bank provided information to show that the bank officer was not authorised to cancel the secondary credit card and that with no other staff being available in the branch with the requisite level of authority to cancel the card, the bank officer was required to direct Ms M to the branch courtesy phone in order to call Card Services.
The bank officer’s recollection of events was consistent with her not being authorised to cancel credit cards. If the bank officer had in fact told Ms M that she was required to call Card Services to cancel the card, then the bank had acted sufficiently in relation to Ms M’s instructions to ensure her former partner could not access her accounts.
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Determining liability under the conditions of use
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The case manager also considered the terms and conditions of use of the card which form the contract between the bank and the card holder.
The credit card conditions of use stated that in order to cancel a secondary credit card, the primary cardholder was required to cut the card into several pieces and return them to the bank, or inform the bank that the card had been destroyed and disposed of, and write to the bank to confirm cancellation of the card. The conditions of use also stated that where a secondary card could not be destroyed, the primary cardholder was to ask the bank to place a stop on the credit card account.
The case manager’s view was that on 27 September 2004, Ms M was in a position to have the secondary credit card relinquished to her as she had attended the branch together with Mr Y, the secondary cardholder. In accordance with the conditions of use, she was then required to destroy the card and return it to the bank or advise the bank of the card’s destruction and disposal. In addition, Ms M was required to write to the bank and confirm the cancellation of the card.
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Finding and resolution
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Ms M did not cancel the secondary credit card in accordance with the conditions of use and was therefore liable for the $19,000 cash advance made by the secondary cardholder on 7 December 2004.
After the Finding was issued, the parties resolved the case on the basis that Ms M would pay the bank $17,000 in settlement of the disputed cash advance.
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