Resolution of ATM complaints

There has been an alarming increase in bank fraud committed through automated teller machines (ATM).

In the wake of these incidents, Sen. Grace Poe has proposed the enactment of a law that would require banks to reimburse depositors victimized by ATM scams.

According to reports, some P220 million was lost to ATM fraud last year.

This figure covers only complaints reported by defrauded depositors.

It does not include cases where the victims opted to quietly bear their loss because they do not know where to complain nor felt the inconvenience of reporting it to the bank or the authorities was not worth it.

During the hearing conducted last March on this issue by the Senate committee on public order, Bangko Sentral ng Pilipinas (BSP) Assistant Governor Noe Ravalo said BSP cannot require banks to refund victims of ATM fraud because “it is difficult to verify the accuracy of customers’ claim that they have been victimized by ATM fraud.”

In what may be considered a consuelo de bobo (or compensating gesture), he stated “he was confident that most, if not all, banks would positively respond to suggestions that they give refunds to clients who have been victimized.”

Security 

He added that since the business of banking depends very much on the confidence of its customers, “the failure to entertain serious concerns over security could adversely affect the banks’ relationship with their clients.”

Reflective of that position of weakness, BSP’s action on this problem has been limited to reminding the public through press releases on the proper handling of ATM cards and ordering the banks to enhance the security features of their ATM machines.

Additionally, its Financial Consumer Affairs Group has announced its readiness to assist ATM fraud victims in bringing their complaints to the banks concerned.

The value of that assistance, however, is a big question mark because at the end of the day, it is the bank that decides whether or not to reimburse the depositor the money he lost due to an ATM swindling scheme.

Of course, the depositor can go to court to demand the return of his money. But considering the slow pace of our judicial system, it would be better for him to simply charge the loss to experience, or transfer his account to another bank and keep his fingers crossed that his money will be more secure this time.

Mediation 

In Malaysia, the Bank Negara Malaysia (BSP’s counterpart in that country) addresses complaints about ATM fraud and other disputes relating to services provided by banks and other financial institutions through the Financial Mediation Board (FMB).

Established in 2005 by Bank Negara, FMB is an independent organization of banks, insurance companies, payment system operators and financial development institutions that provides “objective and timely mediation to the consumers of services in the financial services industry.”

FMB’s governing body consists of nine members, five of whom are independent directors appointed by Bank Negara and the rest are representatives of the banking and insurance industries.

Its mission statement says it is neither the champion of consumer rights nor the champion of the right of financial institutions. It will “deal with all disputes, claims and complaints fairly and impartially.”

Complaints, disputes and claims that relate to, among others, banking or finance, personal loans, ATMs, credit cards, remittances and other similar transactions can be filed with the FMB.

For complaints about banking or financial losses, the amount claimed should not exceed the approximate equivalent of P1.4 million; if it pertains to fraud cases involving checks and credit, charge and ATM cards, the cut-off amount is roughly P350,000.

FMB does not accept complaints about pricing and product policies among its members and cases that are more than six years old or have been referred to arbitration or filed in court.

Procedure 

FMB will take cognizance of a complaint against a financial institution only after the depositor or consumer has brought the matter to the institution concerned and the latter failed to resolve it to his satisfaction.

The complaint should be filed within six months from the date of the institution’s “final decision letter.”

This letter is critical because FMB will not entertain complaints that do not give the institution an opportunity to first address or act on the grievance.

Upon receipt of the complaint, FMB will undertake mediation efforts to settle it amicably. If no settlement is reached, the complaint will be submitted for decision.

The self-imposed deadline of FMB in resolving complaints is three calendar months from the date it receives the required documentation for each complaint.

The award or decision of FMB is binding on the institution, but not on the complaining depositor or consumer.

Despite his acceptance of FMB’s “jurisdiction” when he filed his complaint, he can, if unsatisfied with the decision, seek relief elsewhere either through arbitration or file an action in court.

Unlike the institution that has no choice but comply with the decision, he is in a win-win situation— he can accept it if he wants to and reject it if he still feels aggrieved.

If the posted performance record of FMD is to be believed (and there is no reason not to), the majority of the victims of ATM fraud in Malaysia have been able to recover their money with the least hassle or inconvenience.

Admittedly, BSP does not have the same wide latitude of power that Bank Negara has, which enabled it to organize FMB.

But given its strong moral and legal clout over our banks, BSP can find a way to come up with a mechanism that can replicate FMB’s handling of complaints about ATM fraud.

(For comments, please send your e-mail to [email protected].)