Starling Bank authorized $5500 a fraud transaction from my account, without my consent

downwithpcn

Hello to you all,

At the begging of this month, I noticed an amount of around $1,100 was put on hold as a deposit by Budget US in LA. This happened when I was on a business trip to another continent. This was immediately followed by an attempt to charge my card for the amount of around $4,400, which got declined because the magstripe payment was disabled on my card control setting. 

This was very strange as I normally receive an approval notification for such payments. I immediately notified Starling and froze my card.

The next day, despite all the security measures being in place, and despite the fact that I didn't even have $4,400 in my account, the payment went through and my account has gone overdraft for about £3,000. I even received an email from Starling stating that I went over my account limit and I will be charged interest at 15% EAR until the balance is cleared.

I contacted Starling and explain everything. They confirmed the payment was processed offline and if I recall making this payment. They then canceled my card during my business trip and asked for my consent to go ahead with the fraud investigation. I gave them my consent.

What happened next was interesting. Starling processed this as a retail dispute. They made this decision because a year ago I used Budget US during my trip to the country and made a valid payment.

Now in order to dispute the transaction on my behalf, Starling wants:

• Me to contact the merchant and query these charges.
• The original invoice shows what was purchased and the amount I paid.
• A brief description of the service you have paid for.

I have already explained that:

• I don't have any correspondence from the merchant as I didn't receive any emails or notifications of this payment.
• There has been no invoice provided to me, the money was simply deducted from my account offline, and I wasn't even in the same country when the payment was made.
• I didn't pay for any services nor authorised this payment.
• I explained the FCA steer (taken from section 76 of the Payment Services Regulations 2017) is that: “In most cases, the bank must refund the payment without undue delay and by the end of the business day following the day on which it became aware of the problem”.

It’s been more than 20 days that Starling has been sitting on this and they haven’t changed their position nor will accept that this is a Card Fraud and not a "Retail Dispute".

I am now considering taking legal action against Starling as the missing $5,500 has put me in a difficult position. Since then, I’ve been unable to pay my business expenses and pay my staff. I had to look for loans.

I would really appreciate your input on this.

flaneurs_lobster

It's not obvious from your post but has the latest disputed payment been made to Budget? If so that would be a reason for it being a dispute rather than fraud.

Fraud is a criminal offence, pretty unlikely that an International company is deliberately trying to steal your money, much more likely to just be a !!!!!!-up (although no less annoying and inconvenient). Have you contacted Budget?

Maybe Starling are asking for details of your valid purchase from a year ago?

eskbanker

Car hire companies generally include contract terms authorising later use of supplied card details, in the event of post-hire charges being applicable, not just damage, etc, arising immediately after the rental but also admin charges in the event of needing to relay customer details to law enforcement bodies and so on.  If Budget are effectively piggy-backing onto an earlier valid authorisation then that would probably take it into retail dispute territory rather than fraud as such?  That's still not to say that they'd win a dispute though, but would perhaps explain the bank's initial response....

downwithpcn

flaneurs_lobster,

Yes, I've contacted Budget. They want a bank statement that shows the transaction number, the amount, my name, the credit card's company name, and the date.

The bank statement Starling provides doesn't have the card's company name nor my name nor transaction number. Budget said it's unable to locate the transaction without such a document, hence they are to able to proceed further. They send me a consumer survey/feedback form.

Starling did not ask for the year-old purchase details, they are specifically asking for the current transaction as they are raising this as a retail dispute.

downwithpcn

eskbanker, that was my initial thought. But that car hire was fully insured. Also not sure what kind of admin charges reach $5k fees. Above all, there was a $1,100 deposit payment first made before the initial transaction.

This is still pending payment, and on my Starling app, it says the rental company deposits were placed on hold by the merchant as a deposit. If the vehicle is returned the money should be returned in full. This transaction doesn't even show up on my bank statement as it's on hold.

flaneurs_lobster

downwithpcn said:

eskbanker, that was my initial thought. But that car hire was fully insured. Also not sure what kind of admin charges reach $5k fees. 

Unpaid traffic violation tickets? 

eskbanker

Yes, based on what you say I can't see why you'd lose a retail dispute, but was just focusing on the credible assumption that Budget obtained your card details lawfully in a previous transaction, during which you'd have authorised them to take payment.

downwithpcn

flaneurs_lobster, for $5k? I doubt it as they would have informed me to pay for them first. There was one speeding ticket and they charged my card for the ticket as well as their admin fees. 

Above all, why there was a $1,100 deposit if there were traffic violation charges?

downwithpcn

eskbanker, I'm still curious why this offline transaction (that's how Starling put it) even went through when they first declined due to magstripe being disabled, then despite the card being frozen and there was no sufficient funds it still went through the next day. How is this possible?

eskbanker

downwithpcn said:

eskbanker, I'm still curious why this offline transaction (that's how Starling put it) even went through when they first declined due to magstripe being disabled, then despite the card being frozen and there was no sufficient funds it still went through the next day. How is this possible?

We're all just speculating, but if the transaction was associated with an authorisation that was given last year then I'd assume that doesn't entail any interaction with the current status of the card?

downwithpcn

eskbanker said:

We're all just speculating, but if the transaction was associated with an authorisation that was given last year then I'd assume that doesn't entail any interaction with the current status of the card?

Since there was a deposit put down first, I'm assuming my card was cloned and a car was hired with it, that's how I see it.

Also if it is associated with my last year's purchase, how come it still went through as an overdraft while I don't have any overdraft arrangement with Starling?

All the above aside, is it up to me to prove it is associated with my last year's transaction? Cause I'm currently being ping-ponged between the merchant and the bank. What do I have to do next to resolve this issue?