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Use of debit card – failure to function on overseas ATMs – compensation for inconvenience
Ms B planned to take the “holiday of a lifetime”. She decided to spend up to five weeks in the USA travelling to New York via Tahiti on a special fare. She asked her Bank to arrange travel insurance and sought its advice on a foreign exchange package that would work at both destinations.
With insufficient time to arrange for a credit card, Ms B chose - from amongst the remaining options prepared for her by the bank - to take cash in US dollars and a debit card that would work in both North America and French Polynesia.
Having checked with foreign exchange specialists at head office, bank officers were quite clear that the debit card chosen would be accepted by ATMs in Tahiti and that the combination of debit card and Ms B’s cash holding should ensure an ample supply of local currency for her holiday.
What should have been a relaxing and enjoyable interlude in Tahiti, however, turned into a nightmare for Ms B. She was unable to settle her hotel bill because she had insufficient cash. She trawled for cash from about 16 ATM machines, from the international airport, banks, her hotel, the airline office and shopping arcades in Papeete. Not one delivered the necessary cash.
The hotel retained her passport and insisted she remain in Tahiti until its claim was met. Fortunately, the bank in New Zealand was persuaded to send an urgent telexed transfer of US dollars, enabling Ms B - by then “absolutely gutted” - to leave for New York as planned.
Immediately on arrival at JFK airport she established that her debit card was in fine working order and thereafter she had no further problems with currency. The Tahiti incident however, had been so upsetting that she decided to cut short her holiday. On return Ms B headed for the bank to complain about the extra expense, severe stress, and inconvenience that flowed from her cashless experience in Tahiti.
I looked into her complaint from the perspective of consumer law. Section 8 of the Consumer Guarantees Act 1993 sets out a three-part test of “fitness for purpose”. Applying each part, I concluded:
- the debit card was not reasonably fit for the particular purpose made known by Ms B to the bank; and
- neither was it reasonably fit for use in Tahiti, as attested to by the bank; and
- finally, Ms B’s reliance on the bank’s skill or judgment in reaching her decision to access cash in Tahiti using the bank’s debit card, was reasonable in the circumstances.
The bank made an offer to Ms B of $650 as a gesture of goodwill, but denied any responsibility for the unpleasant situation in which Ms B was placed. I decided that was not a reasonable offer in the circumstances.
I recommended that the bank reimburse Ms B her expenses in obtaining the telexed bank draft to meet the hotel’s claim, and compensate her by an amount of $1,500 for the inconvenience and distress she suffered during her stopover in Tahiti.