CBA Fined for Rising Credit Limit for Game Addicted Man
The Federal Court on October 22nd fined the Commonwealth Bank of Australia AUS$150,000 (US$107,053) for raising the credit card cap of a struggling gambler. The bank contravened the National Consumer Credit Protection Act 2019, the Federal Court ruled.
CBA Slams Supreme Court
In October 2016, the lawyer, David Harris, had warned the bank of his gambling addiction. The CBA was informed that Mr. Harris did not want to remove his credit card cap until he was under control of his addiction, thereby violating section 133(1) of the Act.
However, when he demanded it in January 2017 the CBA decided to increase Mr. Harris' credit cap.
Mr. Harris had maxed out three credit cards which were then merged into one by the bank. It originally lifted the cap from $27,100 to $32,000. He later got a request to lift it by another $3,000, ignoring the CBA's $8,000 annual credit card limit.
Justice Bernard Murphy said Mr. Harris will have taken 137 years and ten months to pay off the $35,706.91 loan with nominal repayments with no extra fees.
CBA Didn't Report On Gambler Issue
The Federal Court ruled that before supplying the funds (under section 130(1)(a)), the CBA had neglected to evaluate the condition and inquire about consumer issue gambling. The CBA even declined to check its financial status and whether it ever used its credit card for gambling (as per section 130(1)(c)).
Mr. Harris stayed developing a gambling addiction until more funds were made available by the CBA. Therefore the bank infringed section 131(1) by not deciding on when the money will be used. The CBA also infringed section 128(d) by not performing the requisite verifications.
Problems Between Customer And Bank
Commonwealth Bank Australia said the case resulted from insufficient warning mechanisms for gamblers.
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.
Australian Banks Increase Protections For Customers
Last December, the Australian Banking Association conducted a consultation on possible legislation surrounding the use of credit cards to fund online gambling which ran until March 4.
National Australia Bank is the country's first bank to offer its customers the ability to block gambling transactions via its smartphone application. Last month Bank Australia launched a similar policy. The consumer association won't encourage account holders to use their credit cards to fund casinos any more.
