Standard Bank has had to refund a Cape Town businessman the more than R11 000 it deducted from his credit card account - on the basis of an invalid sales voucher - following a recommendation by the Banking Adjudicator.
The bank has also been asked to pay the businessman, Robin Macallan, of Pinelands, interest at 15,5 percent on the amount, but it refuses to pay the penalty interest of 22 percent he was charged for overstepping his credit card limit.
Macallan took his complaint to the Adjudicator last year after Standard Bank kept debiting his account for a computer system which he had ordered but had not signed for, because it was not working properly.
Macallan had ordered the computer, costing just over R11 000, for his business from BJ Technologies, and a specific term of the agreement was that payment would only be made once the equipment was installed and fully functional. He planned to pay for the computer equipment on a budget plan on his credit card.
He agreed that BJ Technologies could apply for an authorisation code from the bank when it delivered the equipment and, to facilitate the authorisation, Macallan gave the company his card number and CVC number (the last three digits of the number on the back of a credit card). He did not hand over his card nor did he sign the sales voucher at any stage.
The computer equipment failed to work according to the basic requirements guaranteed by BJ Technologies and the company was unable to correct the problem. After six weeks, Macallan tried to return the equipment to the company but could not get hold of them. Shortly afterwards, BJ Technologies was liquidated.
Standard Bank then debited Macallan's account with the R11 000 in December 1999, but reversed the amount after Macallan complained in March 2000.
In August 2000, his account was again debited on the basis of a signed sales voucher and delivery slip, even though BJ Technologies had been liquidated the previous month, but Macallan denied that he had signed anything and said the signature was not his.
Initially, Standard Bank told the Adjudicator Macallan's card had been swiped through an electronic data capturing terminal and that the voucher had been signed, but the bank later admitted the card had not been swiped and that it was aware of the fact that Macallan had not physically handed his card to BJ Technologies.
Nonetheless, the bank denies liability for incorrectly paying out the money on the following basis:
* The bank will accept a voucher that has relevant and valid card details even without a signature, taking into account that most transactions are done manually, according to the cardholder's instructions, and cardholders are liable for such transactions;
* Macallan had given the company his card account number, the expiry date and the CVC number to apply for authorisation, and the bank regards this as negligence on Macallan's part.
Standard Bank says that by giving these details to a shop, the shop can process a transaction. In Macallan's case, BJ Technologies processed the entire transaction and did not merely obtain authorisation; and
* The bank also says that any breach on the part of BJ Technologies for processing the entire transaction was a matter between Macallan and BJ Technologies.
Neville Melville, the Banking Adjudicator, says Standard Bank was in breach of the agreement between itself and Macallan - because it did not have an imprint of the card and a signed sales voucher. The sales voucher was invalid because the signature differed from Macallan's.
He also says BJ Technologies was not in the mail-order business, so it needed to get Macallan's signature, but did not do so. The company also failed get an imprint of the card, which is necessary in the case of a manual transaction.
Melville says Standard Bank had recourse against BJ Technologies but chose not to pursue it, probably because the company had been liquidated.
He disagrees with Standard Bank that Macallan was negligent by providing information on his credit card to BJ Technologies because:
* Macallan did not hand over his card to BJ Technologies; and
* It is not unusual, in the ordinary course of business, for a cardholder to provide their card number, expiry date and CVC number to a shop. These details do not confirm the identity of a cardholder or the validity of a sale, Melville says. The merchant or shop still has to get an imprint of the card or has to swipe the card through a terminal to prove to the bank the card was present. The shop must also get your signature on the sales voucher.
"If this were not the case, the credit card system would be rife with fraud committed on the basis of card details obtained by unlawful and illegal means," Melville says.
He says it is unfair of Standard Bank to shift its responsibility to Macallan as a result of the bank not being able to debit the shop's account due to a lack of funds.
Similarly, Macallan would not be able to hold Standard Bank liable for contractual damages which he has suffered (for example, the fact that the computer system did not work) as a result of the breach of contract between himself and BJ Technologies.