The Commonwealth Bank of Australia (CBA) has been fined AU$150,000 (US$107,050) by the Federal Court on October 22nd for upping the credit card limit of a problem gambler.
The bank has breached the National Consumer Protection Act 2019, according to the Federal Court.
The Bank Knows
The client, David Harris, has specifically made the bank aware of his gambling addiction in October 2016. A roofer earning $70,000 a year, Harris informed the CBA was informed that he does not want to increase his credit card limit until he got over his addiction, therefore breaching section 133(1) of the Act.
However, when Harris requested to have his credit limit increased in January 2017, the CBA agreed.
Harris had maxed out three credit cards and the bank then combined all into one. His limit was initially increased from $27,100 to $32,000. Later on, he received a letter offering to increase it by another $3,000, despite the CBA's maximum credit card limit of $8,000.
According to Justice Bernard Murphy, with minimum repayments and no additional charges, it will take Harris a total of 137 years and 10 months to pay off the debt worth $35,706.91.
Failure to Check on Problem Gambler
The Federal Court stated the CBA failed to evaluate the situation and to ask about the customer's problem gambling before providing the funds. Also, the CBA failed to check on his financial situation and if he was still using his credit card for gambling.
Unfortunately, Harris at that time still had a gambling problem when the CBA made the additional funds available. Thus, the bank clearly breached section 131(1) as they have not assessed what the money would be used for. For not making the necessary verifications, the CBA also breached section 128 (d).
Hardship Arrangement between Customer and Bank
Harris ended up in serious debt after a multi-year gambling binge, thanks to funding from the bank's cards.
Justice Murphy said, "He was only able to continue to pay off his credit card because he worked extended periods without rest days, working 6 to 7 days a week, in physically demanding work as a roofer. He was also reliant on winnings from gambling and a loan from his employer."
"CBA was not responsive to Mr. Harris' difficulties," the court said. He became physically and mentally exhausted, had trouble sleeping and started to suffer from anxiety and depression.
CBA accepted the penalty as appropriate.
A spokesperson of the CBA said, "We did not do the right thing by our customer and we again apologize to him for the personal impact this has caused."
The situation was a result of inadequate gambler notification systems, "As recognized by Justice Murphy in his judgment, the CBA has taken corrective measures to finalize a hardship arrangement with Mr. Harris and has introduced a series of measures intended to address issues associated with problem gambling as well as broader measures to assist customers to manage their credit card expenditure."
Source:
https://www.theguardian.com/australia-news/2018/mar/22/commonwealth-bank-offered-credit-card-increases-to-problem-gambler
