CC fraud by family

CKhalvashi

chattychappy wrote: »

Very similar story. But in that case, a current account was involved. The FOS found that gross negligence meant that the debit card holder was liable (after they discovered the drug problem).

In this case we have a CC. On similar facts there was also (perhaps) gross negligence, but with credit tokens the liability is limited.

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/46/46_plastic_cards.htm

I feel that the OP should be able to recover the whole lot, bar £50 perhaps.. though it will be a struggle. Unless I've missed something?

The struggle will probably end in court, however if it's going to court anyway.......

Would withdrawing cash be counted the same, as my understanding is that it comes under different rules, starting with s.75 protection, and finishing (I don't know where)

CK

chattychappy

CKhalvashi wrote: »

The struggle will probably end in court, however if it's going to court anyway.......

Would withdrawing cash be counted the same, as my understanding is that it comes under different rules, starting with s.75 protection, and finishing (I don't know where)

CK

It's S83(1) and S84(1). I don't think there is any difference re. cash withdrawals. Case 46/2 (on the the link I gave) was a cash withdawal - the CC claimed gross negligence and the FOS agreed it was. But the FOS also said the Act took precedence so liability was limited to £50 regardless of the T+Cs/Banking Code.

I think the T+Cs/Banking Code is a classic example of drafting something hoping customers won't realise it's unenforceable. CC points to T+Cs and says "sorry guv, that's what you signed up to" and people think they're stuffed (when they might not be).

There might be other hurdles to overcome on this one, but I feel the OP is far from sunk.

Clive_Woody

agrinnall wrote: »

You have to understand the way that the bank will look at this - cash withdrawals require both the card and the PIN, your brother should never have had the PIN in the first place, but once it was known this was happening the PIN should have been changed and kept secret. All of this is the responsibility of the cardholder, and the bank will be within their rights not to refund anything. Now, they may make a goodwill gesture and write some of it off, but I don't think you can rely on it.

From my understanding this is the most relevant fact. The OP's brother should never have had knowledge of the PIN for the credit card and once this had been used the PIN should have been changed and not disclosed a second time.

I don't mean to sound harsh but the parents have been quite negligent on a number of counts, allowing repeated access to the card, not changing the PIN after the first incident and not reporting it sooner to their credit card issuer.

Jazzin

You have had some great responses by people who know a lot. All I would wish to say, is that your family will need your support and that is the best way to sort out problems. It won't be easy. Keep trying though, that's what families are for.

chattychappy

Clive_Woody wrote: »

From my understanding this is the most relevant fact.
....
I don't mean to sound harsh but the parents have been quite negligent on a number of counts, allowing repeated access to the card, not changing the PIN after the first incident and not reporting it sooner to their credit card issuer.

Oh there we go again on negligence! Case 46/2:
Mrs A was very unpleasantly surprised when her statement showed that – over a 2-week period – withdrawals totalling £5,000 had been made from local cash machines. She knew that she had not made the withdrawals herself. She rarely used her credit card, which she kept in a desk drawer at home – together with the details of her PIN that the firm had sent her.

Mrs A contacted the firm to say that she had not made the withdrawals. She also reported the matter to the police – adding that she thought her teenage son might have been responsible.

The police later charged Mrs A’s son, and he was convicted of offences under the Theft Act. He did not suggest in his defence that his mother had allowed him to use the card.

The firm told Mrs A that she was liable for the withdrawals because she had been grossly negligent in the care of her card and PIN. It cited the card terms to support its view. Unhappy with the firm’s stance, Mrs A came to us.

complaint upheld
We were satisfied that the withdrawals had been made without Mrs A’s authority. We thought that if she had authorised the withdrawals:

• it was unlikely that she would have told the police that she suspected her son; and
• it was likely that her son would have mentioned it in his defence.

The card had been used as a credit-token, so it did not matter that the card terms said that Mrs A would be liable if she failed to take reasonable care of her card and PIN. This was because the provisions of the Consumer Credit Act take precedence.

We agreed with the firm that Mrs A had been grossly negligent in the care of her card and PIN. So she was made liable for the first £50 of the losses. We required the firm to refund the rest.

(emphasis added)

Now I think there might be some other issues in the OP's case - for example the CC might claim that the brother had the parent's permission, or whatever. (Onus on proof is on the CC.) But negligence doesn't come into it. The law is clear on unauthorised use. This might seem harsh on the CC, but I don't think it is unfair. Borrowing is a regulated activity. Lenders choose to use "tokens" (ie plastic cards/PINs) as a substitute for proper ID verification at their risk. Usually the system works fine. Sometimes it doesn't. And the law says you can't be bound by borrowings you didn't enter into.

MPH80

https://forums.moneysavingexpert.com/discussion/372881

Link to my original post where (I think) I was the first here to outline how S84 applies to chip and pin cards with regards negligence - along with confirmation from the (then) ombudsman.

chattychappy

MPH80 wrote: »

https://forums.moneysavingexpert.com/discussion/372881

Link to my original post where (I think) I was the first here to outline how S84 applies to chip and pin cards with regards negligence - along with confirmation from the (then) ombudsman.

Yes, I think you were!

vixster123

Some very helpful replies, thanks so much everyone. I have lots to read up on and continue to appreciate any advice.


Yes I agree, My parents have been negligent in not protecting their security after the first instance and with himdsight we should have contacted the police and CC company after the first time.


However, with this last one...My parents didnt even know the pin to this card, the only transactions on it at all were from a DD that was set up over a year ago so goodness knows how my brother found that PIN out.


With the rest of them, I agree that the bank may see this as accepting the charges as they have paid the minimums since therefore not bringing the fraud to question. But its certainly worth a try with all the info that has been provided on FOS.


These will all be used in the case against my brother so if he is found guilty of fraud in those cases too, then maybe we wont be liable for the older ones.


My next question is: would we be better hiring a soliciter/financial advisor to act as a central person regarding this mess? I feel my next priority should be to have the interest suspended on all cards whilst we sort this mess out as even if the banks rule that they are liable for some if not all, they realistically cant afford to pay and would never get out of this debt without bankruptcy/consolidation/losing the house.


This is just horrible, I know I need to help my parents but Im not ready to give up on my brother even if everyone else does. We have always been quite 'smug' in that we are a 'nice' family and this has been such a shock to think its all come crashing down I such a way.


I really do appreciate all the advice and guidance and the fact that none of you have been judgemental in this. Now off to work with the challenge of holding myself together till 5.30

longtermplanner

vixster123 wrote: »

My next question is: would we be better hiring a soliciter/financial advisor to act as a central person regarding this mess? I feel my next priority should be to have the interest suspended on all cards whilst we sort this mess out as even if the banks rule that they are liable for some if not all, they realistically cant afford to pay and would never get out of this debt without bankruptcy/consolidation/losing the house.

NO. There are places where you can get free help and they won't be judgemental either. Try 1 of these three:

Citizens Advice Bureau (face to face) http://www.citizensadvice.org.uk/index/getadvice.htm
StepChange (telephone advice) http://www.stepchange.org/
National Debtline (telephone advice) http://www.nationaldebtline.co.uk/england_wales/

Either your parents can ask for help or you can if they will give you a letter authorising you to deal with all matters relating these alleged debts. Although to be honest it is better if they do it themselves as you may simply not know some of the information and you may find it personally difficult to keep asking your parents questions.

chattychappy

I think with £20,000 involved, I probably would consider a solicitor. Problem is that ones that know financial regulation are typically more expensive. You articulated the original problem very well, I think you could do it yourself and then perhaps engage the FOS if necessary. If you do go to a solicitor, I would print out this thread and take it with you so they've got some case law to hand.

longtermplanner wrote: »

NO. There are places where you can get free help and they won't be judgemental either. Try 1 of these three:

Citizens Advice Bureau (face to face) http://www.citizensadvice.org.uk/index/getadvice.htm
StepChange (telephone advice) http://www.stepchange.org/
National Debtline (telephone advice) http://www.nationaldebtline.co.uk/england_wales/
.

Well solicitors are not (should not be) judgemental either. Out of the above, I would choose the CAB, though frankly my experience of them has been pretty poor on legal stuff. Depends who you get. I have nothing against these organisations, but this is not a debt issue, it is a dispute/legal issue. If the OP contacts them, they must engage on this level rather than run the "let's compile a statement of affairs" procedure.

OP: Interest/charges etc in respect of the unauthorised charges should all be refunded. CRA reports should be cleaned up too. The principle is that your parents should be put into the position they would have been in had none of this happened. But £15K... the bank will kick up dust.

Oh and having paid the minimums doesn't make it too late to get the money back. The only issue I can see is that the bank might try and use this to suggest that somehow your brother was acting with your parents' authority.