Ombudsman upholds bank's anti fraud measures

Brendan Burgess

Another interesting decision published yesterday by the Ombudsman (in pdf format)

Credit card anti fraud measures are appropriate even when they cause inconvenience

A Credit Card customer of a Bank went on holidays to the Far East. While in Hong
Kong he tried to use his Credit Card to make purchases. His Card was rejected. It turned
out the Bank had placed a stop on his Card because the proposed amounts had triggered
the Bank’s fraud prevention system.
The Complainant was very annoyed about this and complained to the Ombudsman that
the Bank had exceeded its powers and been in breach of contract. The Bank said in its
defence that during the course of standard monitoring procedures at the Fraud Prevention
Department, it became necessary for the Bank to make contact with the Complainant in
order to verify that the transactions in question were genuinely his and were valid. The
Bank telephoned the Complainant’s mobile ‘phone but he did not have it with him in the
Far East. As a result of the Bank’s inability to contact the Complainant, it was decided to
place a fraud prevention marker on the account until such time as contact with the
Complainant could be established in order to verify the transactions. Accordingly, when
the Complainant next sought to use his Card, the transaction was declined and was
referred for voice authorisation. However, the retailer did not follow the required process
and did not seek voice authorisation, as a result of which the automatic transactions were
refused. The Complainant argued that as he visited the Far East every year for a number
of years past, the Bank should not have triggered the fraud prevention mechanism.
The Ombudsman found that the use by Financial Service Providers of fraud prevention
measures is in the interests of Credit Cardholders. While a bank has a duty to act
reasonably, there was no evidence in this case that, having regard to the size of the
transactions and the location, the Bank had acted unreasonably. The fact that a fraud
prevention marker is placed on an account, even if the purchases were authorised and the
transactions were valid, does not suggest that the systems in place are flawed.
A Credit Card company is required to balance the interests and convenience of its
customers with the requirement to prevent fraud and in this case, the Ombudsman found
that the Bank had acted reasonably. While there was a delay in establishing contact with
the Complainant, once contact was established, the fraud prevention marker was removed
and the Complainant proceeded to use his Credit Card in the normal way. The
Ombudsman found that the Bank had acted correctly in the circumstances of this case and
the complaint was not upheld.


Registered User
What does this mean in practice? If you plan to deviate from your normal credit card use pattern then you need to inform your bank/credit card provider in advance? For example, the many people who don't use their cards that much or at all at home but then use it a lot for a two week hooliday or the like?


Registered User
yes, if you plan to deviate from the norm it's a good idea to inform your Cr Card company.
I had experience of something like this, but it was in Ireland. I was in the process of buying a new pc at the time.
As my son is more knowledgable in this field I was letting him do the ordering for me as he was assembling it himself. There were roughly 6 different transactions. Credit Cards declined a payment .
When I phoned them they quite happily paid the next request. They told me that if the spending on the card looks suspicious they stop it. Buying computer components seems to be one of the most typical card I guess they were on the ball.
They had been trying to contact me but I had changed phone no's.....

Surely the first thing you do if your card is declined is phone the company to see what the hell is wrong ? Then it can all be sorted by one phone call.....


This cuts both ways. I'm the kind who regularly checks my statements — but if I wasn't, I might have treated someone to a €1,700+ meal :eek: at the (non-existent) Ristorante Gallego, a couple of years ago. The charge showed up a full three months after we'd returned from hols...

So I'm happy to see the banks/credit card companies tightening up their procedures. At the same time,
Perplexed said: the company to see what the hell is wrong ? Then it can all be sorted by one phone call.....
doesn't really apply if the phone lines are only open Mon-Fri, 8.00-20.00. I know that you can always leave a message, if it's a case of reporting a stolen/lost card, but it's not much use if you're standing in front of a hotel receptionist of a Sunday morning, trying to pay your bill and get on the coach to the airport.