Case Notes
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Fraud - credit card - fraudulent application - liability - police complaint
Mr C discovered that his wife had forged his signature on a credit card application, and had incurred a significant debt in their joint names.
Mr C told the bank that he did not apply for the card, but the bank was not prepared to consider a fraud complaint until Mr C made a formal complaint to the police. It was suggested to Mr C that he should sort the matter out directly with his former wife.
Four years later, Mr C contacted the bank again because he could no longer afford to make repayments on the card. Again, the bank was not prepared to consider a fraud complaint because Mr C had not made a complaint to the police. By this time, it was too late for Mr C to make a police complaint.
When I investigated Mr C’s complaint, the bank accepted that Mr C did not complete or sign the application form. I found that the bank was negligent because it did not take steps to validate the authenticity of the application form. In addition, I was satisfied that Mr C did not receive any benefit from the transactions made by his former wife.
Because Mr C did not apply for the account, he had no contractual liability for the debt. Accordingly, I found that the bank did not have the right to:
• demand repayment of the debt from Mr C
• refer the debt to a third party for collection
• list Mr C with a credit reference agency.
I also found that it is not always necessary for someone complaining of fraud to make a police complaint. In this case, the bank was in a position to form a view as to whether the application was fraudulent because it was in possession of the application form. I did not agree with the bank’s submission that Mr C’s failure to make a police complaint affected its ability to seek redress from his former wife. The bank had entered into a contract with her, and it could seek repayment of the debt from her by enforcing its contract.
Both Mr C and the bank accepted my proposed recommendation that the bank should reimburse Mr C the total amount of the repayments he had already made to the bank, nearly $4,000.