A man whose debit card was stolen by two strippers he met in a club whilst on holiday has been refunded the majority of the £6,000 swiped from his account, after the Channel Islands finance watchdog waded into the issue.
Outlined as a case study in the Channel Islands Financial Ombudsman’s (CIFO) Annual Report for 2019, the watchdog became involved when the bank refused to refund the stolen cash – totalling £6,136 – claiming the transactions were “usual amounts for a strip club”.
The redacted case study explains that the traveller, anonymised as ‘Mr A’, notified his bank that he would be going on holiday.
Whilst abroad, he frequented a local strip club where he made a payment of £74 on his debit card.
Pictured: The Ombudsman steps in to resolve any disputes between individuals and financial companies.
It was at this point that he says he was approached by two women in the club.
The following day, the case study recounts, “Mr A noticed that his debit card was not in its usual place in his wallet,” prompting him to contact his bank. They informed him that “a number of high value transactions had been made the night before that he was not aware of, totalling £6,136, which had emptied his bank account.”
The debit card was immediately cancelled.
The case study report continues: “The transactions were mostly for the same amount and were made to two different clubs over a short period of time. Mr A went to the local police station overseas to make a report but was told to go to the central police station.”
Due to his loss of funds, Mr A could not afford the trip to the central station and therefore left the country on his scheduled return flight without a police report. However, he did report it to his local authorities upon his return home.
When trying to recover the stolen funds from his bank, they said that “no fraud had been committed as the correct card and PIN number had been used, there was no police report, the high valued transactions were usual amounts for a strip club and his case would therefore be closed.”
Despite Mr A’s repeated explanation of the difficulty he faced in obtaining a police report, the bank said that they would not reimburse him.
Pictured: Not having a police report about the incident was one of the reasons the bank refused to refund the stolen money.
Having become “distressed with this response", Mr A referred his complaint to the CIFO, whose role involves resolving disputes between consumers and financial institutions in the Channel Islands.
In terms of its investigation of the alleged fraud, the Ombudsman says it “found that most of the transactions were for the exact same amount and had been debited within a very short period of time, in two different clubs where the two women worked.
“CIFO therefore concluded that a fraud had taken place. The bank’s internal fraud detection system had, in fact, flagged one of the transactions but, because the travel notification had been applied to Mr A’s account, the automated fraud alert was overridden. CIFO also noted that this was at odds with the bank’s website which indicated that transactions would continue to be monitored while a customer is on holiday.”
Describing the bank’s actions as a “demonstrated lack of effective transaction monitoring,” and noting the man’s attempt to obtain a police report on the matter, the CIFO upheld part of the complaint.
The bank was therefore directed to refund three-quarters of the loss, reimbursing Mr A for £4,693.
The case study was one of several published by the CIFO in its 2019 Annual Report as part of a concerted effort to better illustrate its work to islanders provide teaching points for other financial services providers.
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