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ATM – notes retracted – account debited – delay in reversing debit
Mr N was a customer of bank A, which issued him a card to use for Eftpos and ATM machines. He used an ATM machine belonging to bank B to withdraw $200 in cash. The machine read his card, the transaction was accepted and the funds were dispensed by the machine. However, when he failed to remove the notes within the usual 30-second time limit, the notes were withdrawn by the machine. His account was debited with the amount of the transaction.
Mr N asked bank B for his money back. Over two weeks elapsed, without any sign of a refund credit to his account. He then complained again to bank B, which contacted bank A in order to trace the funds. Meanwhile Mr N complained to the Banking Ombudsman, saying that he considered that bank B was under an obligation to credit his account with that amount as soon as it was established that he had not received the funds.
My investigator established that bank B had forwarded the funds, together with the customer’s card number details, to bank A on the business day after the transaction. Bank A did not action the refund until Mr N complained, two weeks after making his initial enquiry.
Mr N was adamant that his complaint was against bank B, which owned the ATM, even though it was not the bank which had issued his debit card.
In order to determine what obligations bank B might have, I surveyed eight banks about good banking practice in the circumstances. The survey showed that:
- because banks are unable to access information about customers of other banks, the general practice is for a bank detecting a surplus resulting from an ATM transaction to forward the funds, together with the cardholder information, to a holding account at the card issuing bank. In some instances the ATM owning bank also sends a fax detailing the surplus transaction;
- only one bank would, when detecting a surplus transaction, contact the card issuing bank and request the account number details, so that it can credit the cardholder directly; and
- only one bank had printed information in its terms and conditions of use brochure for the card about the bank’s liability for loss experienced through a malfunctioning ATM. This brochure also outlined the process for error notification. (In this particular case there was no malfunction, as it is normal practice for ATM machines to withdraw the cash if the cardholder does not take the notes within a short time).
After considering the survey and the other information obtained during my investigation, I concluded:
- since the complainant did not have a contract for banking services with bank B, there was no failure to meet any contractual terms;
- the evidence showed that bank B had complied with good banking practice in following its usual practices and policies;
- it had returned the money to bank A promptly (on the following business day); and
- bank B had consequently not failed in any obligation it owed to the complainant.
Mr N remained firmly of the view that bank B should have taken immediate steps to credit the funds directly to his account. However, after hearing his further submissions I was not convinced that I should alter my initial view, and I accordingly discontinued my investigation.