Unauthorised transactions and ePayments Code

A consumer should first complain to the creditor.Every credit licensee must have an internal dispute resolution process to handle complaints (s 47(j) National Consumer Credit Protection Act 2009 (Cth) (‘NCCP Act’)). If that fails, a complaint can be made to an ombudsman.

Unauthorised transaction disputes are difficult. It is usually not enough to simply assert that you did not authorise the transaction.

You need to provide evidence that:

• the transaction was made by someone else; and
• you did not authorise the other person to make the transaction.

This is especially the case in disputes involving transactions made with a PIN or password. The ePayments Code states that the onus of proof is on the financial institution to show the transaction was authorised. The code also states that using the correct PIN is significant, but not overwhelming evidence that the transaction was authorised. Despite this, financial institutions and the Australian Financial Complaints Authority (AFCA) often regard the use of a correct PIN or password as sufficient proof that the transaction was authorised (i.e. you must have disclosed your PIN or password to someone else).

To combat this approach, you need to find facts that rebut this. First, identify how the unauthorised transactions took place. Review the pattern of the unauthorised transactions to see whether the time and place of the transactions are inconsistent with you making the transactions. Also, consider whether the time and place of the transactions suggest how the unauthorised transaction may have taken place. For example, in one dispute, all the unauthorised transactions took place at around 3 am at an ATM close to the consumer’s share house. This suggested that someone in the share house was taking the consumer’s bank card at night and had observed the consumer entering their PIN on an earlier occasion.

Second, consider where you keep your bank card and who else may have had access to it.

Third, consider whether you keep a record of your PIN and where that record is kept. If you keep your PIN with your bank card and it is liable to be lost or stolen at the same time as your card, then you are likely to be liable for all transactions. If not, consider how someone else could have discovered your PIN. For example, you could have been ‘shouldered’ – this is where someone stands behind you and watches you enter your PIN.

Fourth, request the financial institution review whether there have been other claims of unauthorised use at the particular ATM or EFTPOS machine. This can indicate that cards have been ‘skimmed’ (i.e. copied) by fraudsters. If this has occurred, you should not be liable for the unauthorised transactions.

If you can’t resolve your dispute with the creditor, you can complain to AFCA, which is an external dispute resolution scheme that can receive complaints about creditors. It is free for consumers to complain to AFCA.

It is intended that AFCA provide an easily accessible method for unrepresented consumers to have their disputes heard and determined by a fair and independent decision-maker. Decisions made by AFCA are binding on the creditor but not on the consumer. If the consumer doesn’t agree with the decision, they can take their case to a court (see ‘Going to court’, below).

To find out whether a credit provider is a member of AFCA, or to lodge a dispute (disputes can be lodged online), contact AFCA directly.

Under the AFCA Rules, once a dispute is lodged, the member credit provider must not (unless AFCA agrees in writing):

• commence legal proceedings against the consumer in relation to any aspect of the dispute;
• continue legal proceedings it had already commenced when the dispute was lodged except to the minimum extent necessary to preserve its legal rights; or
• take any action to recover a debt that is the subject of a dispute, protect assets securing the debt or assign the debt while AFCA is dealing with the dispute.

Disputes arising in Victoria under the NCCP Act can be dealt with by the Federal Court, the Federal Circuit and Family Court of Australia, or the Supreme, County or Magistrates’ Court.

For some applications under the National Credit Code, the applicant can choose to have their proceeding dealt with as a ‘small claims proceedings’ in the Magistrates’ Court or in the Federal Circuit Court. Small claims proceedings are conducted in a more informal manner, without regard to legal forms and technicalities, and without lawyers (except with the court’s permission). In addition, there is a presumption in small claims proceedings that the court will not award legal costs against the unsuccessful party.

The details of the national jurisdictional framework are set out at division 2 of Part 4–3 of the NCCP Act. Section 199 lists causes of action that may be brought within the small claims jurisdiction.