MBNA has overcharged its customers by €18m!

Brendan Burgess

Brendan Burgess

Founder
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From [broken link removed]

MBNA refunds €18m to customers

MBNA is to refund about €18 million to customers after it discovered an error had been made in how interest was calculated.
The company said those affected by the error would receive about €38 each or less, and had written to its customers to let them know of the mistake.
The refund is due to a drafting error in the credit card firm's terms and conditions. Although the firm applied interest according to its own marketing material, the drafting error meant doing so broke its own terms and conditions in some circumstances.

"When this issue was identified, we immediately conducted a full review of all our terms and conditions stretching back to 1997," the company said in a statement.
"As a result of this we discovered an additional error and therefore we will refund any interest which may have been applied on the annual Government tax charged on accounts up to 2007 on the basis that we didn’t set out how interest would be applied."
MBNA said it was starting a review of accounts to see who was affected by the error, warning it was "complex and lengthy". However, it said customers should receive the refund, plus related interest, by March 2010.
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MBNA cannot be allowed to do these calculations themselves.

This overcharging has a huge knock on effect. It may have meant that someone could not clear their account, so they would be hit for interest and penalties on the entire bill.

In addition, they have been torturing people who were in arrears. If this was partially caused by their errors, then these people should get compensation for the pain suffered.

Brendan
 
MBNA said it was starting a review of accounts to see who was affected by the error, warning it was "complex and lengthy".

That's really rich coming from an organisation that has set out to be really complex and lengthy in it's terms and conditions on how it applies interest on accounts and on it's dealings with it's 'client's'.

How was this error discovered, did no one other than MBNA notice this, what about regulators/etc

What exactly is the error and the additional error? Who discovered it?
 
I have issued the following press statement today:

Financial Regulator must arrange independent supervision of MBNA overcharging.

Brendan Burgess, consumer advocate, today called on the Financial Regulator to make sure that there is some independent oversight of MBNA’s refund of credit chard overcharging.

It is not as simple as refunding interest charged and interest on interest.

The interest on the overpayment must be refunded at the same rate which MBNA charged on their arrears.

MBNA imposes very high penalties on people who have been in arrears. These penalties are among the highest charged by Credit Card companies in Ireland and include

Increasing the interest rate from 14.9% to 25%
[broken link removed] of €12.70 each time you go over the credit limit
[broken link removed] of €15.24 for not meeting the minimum repayments
[broken link removed] of €19.05

They don’t appear to highlight the actual charges on their website.

If the overcharging has caused people to fall into arrears, then the penalties and charges associated with going into arrears will have to be refunded as well.

The company also is very aggressive in pursuing arrears calling customers up to 18 times a week. Posters on Askaboutmoney.com have described themselves as being “tortured” and “stalked” by MBNA. One person reported being called 6 times a day.

If these customers fell into arrears due in part to MBNA’s own errors, then they should get compensation for the aggravation they suffered.

MBNA has recently introduced new terms and conditions which make it much more difficult for customers to qualify for an interest free period. In summary, a customer must pay the balance in full and on time for two months in a row to avoid interest charges – all other credit card companies restore the interest free period as soon as the customer pays the bill in full and on time, once only.

Brendan Burgess

[email protected]



MBNA provides credit cards on behalf of
Ryanair.com
EBS
AXA
Sony
PigsBack.com
Irish Nurses Assoication
Irish Farmers Association
Postbank
DSPCA
Liverpool Football Club
Celtic Football Club
Munster Rugby Credit Card
Dublin GAA
 
HI Towger

They were the only ones I could find on the website.

Google has identified the following. Please let me know of others

Ladies Gaelic Football Players
Contract Bridge Association of Ireland
Irish Heart Foundation
Certified Public Accountants in Ireland

Third Level Colleges
Griffith College
Institute of Technology Tralee
National College of Ireland
Royal College of Surgeons in Ireland
University College Cork



Brendan
 
Press Release


Reporters May Contact:
Suzanne Holmes, MBNA Press Office, Dublin
+353 86 811 6141
DUBLIN, 14 December, 2009 - We have identified an error in the way the charging of interest
was described to customers in the terms and conditions of our credit card product.
As required by the provisions of the Consumer Protection Code we have reported this error to
the Financial Regulator and are working closely with them to ensure that our affected
customers are fully reimbursed. The relevant terms and conditions have now been corrected
to address this issue and steps have been taken to prevent a reoccurrence.
Although we have applied interest as outlined in our marketing material, a drafting error within
our terms and conditions from 2007 prevented us from applying interest to accounts in certain
circumstances; however, interest was applied in these circumstances in error and this was not
in accordance with our terms and conditions.
When this issue was identified, we immediately conducted a full review of all our terms and
conditions stretching back to 1997. As a result of this we discovered an additional error and
therefore we will refund any interest which may have been applied on the annual Government
Tax charged on accounts up to 2007 on the basis that we didn’t set out how interest would be
applied. No other remediation is necessary; all terms and conditions have now been corrected
and issued to customers to address these issues.
We are now assessing the impact, if any, on each of our customers. The time period, the
number of customers and number of transactions involved make this review a very complex
and lengthy process. As a result this will take some time to complete; however, we will ensure
that if a customer is due a refund, plus related interest, they will receive this by March 2010 at
the latest.
The refund to the majority of affected customers is likely to be around €38 or less. In total, we
expect to refund around €18 million to customers.
We have written to our customers to advise them of the issue. If a refund applies, we will
notify them as soon as the assessment is completed. No action is necessary on the part of our
customers at this time.
We sincerely apologise for any inconvenience and assure customers that it is our intention to
resolve this matter fairly, correctly and in a timely manner.
ENDS
Notes to Editor
Basis on which interest will be refunded
Although we have applied interest as outlined in our marketing material, a drafting error
within our terms and conditions (Section 2b on how we work out interest) from 2007
prevented us from applying interest to accounts in certain circumstances; however,
interest was applied in these circumstances in error and this was not in accordance with
our terms and conditions.
Accordingly, we are refunding interest that we charged customers, on the following
basis:
interest charged for the period between the transaction date and the
statement date
interest charged on non retail purchase (i.e. ATM or cash withdrawal)
transactions where the customer has not made a prior card purchase.
interest charged where a customer has been a full balance payer for at least
two consecutive months
When this issue was identified, we immediately conducted a full review of all our terms
and conditions stretching back to 1997. As a result of this we discovered an additional
error and therefore we will refund any interest which may have been applied on the
annual Government Tax charged on accounts up to 2007 on the basis that we didn’t set
out how interest would be applied.
Customers can write to us at MBNA Europe Bank Limited, Freepost, Reference
IR2BMB1/2 PO Box 25, Carrick-on-Shannon, Co. Leitrim; or call 1800 818704. From
overseas dial +353 71 9656 267. Lines are open Monday to Friday 9am – 5pm and
Saturday 9am – 1pm (Ireland time).
 
They must be having a good laugh at their original 1997 T&C, I have a very old copy (somewhere) and it is just version of their UK T&C with incorrect currency etc!
 
I wonder what exactly they are going to do about their past customers? I closed my account with them a year ago but obviously would have had an account during the time mentioned. I've not had any correspondence from them since I requested they remove me from their marketing list. Should I ring them directly?
 
I Really Hope the Financial Regulator Tortures them now The Same way they have tortured me And other customers who found them selves in Difficulty....:mad:
 
Use your included calls to call them without revealing your number 071 9656 267. ;)
Calling their 1800 number will reveal your landline/mobile to them.
 
Brendan said:
This overcharging has a huge knock on effect. It may have meant that someone could not clear their account, so they would be hit for interest and penalties on the entire bill.
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I wonder how many people missed a payment because of this and how quickly MBNA were to record this on the ICB which could result in an impaired credit record for those people. If this has occurred will MBNA repair their ICB record?
 
bond-007 said:
I don't suppose the FR is going to penalise them at all for this?
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It doesn't look likely unfortunately

From the

The regulator said its consumer protection code was being followed closely by MBNA to make sure customers were fairly and quickly reimbursed. A spokesman said: "The Financial Regulator is satisfied with how this matter is now being dealt with and it is engaging with the firm to ensure that procedures and remedial action is undertaken to prevent this type of issue reoccurring.
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If they find it difficult to calculate interest, how is the average punter expected to work it out!
 
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