ATM withdrawal made with a stolen credit card

While the complainant was shopping in the mall someone stole a wallet including the credit card from her. The complainant notified the bank and the police of the theft immediately. Subsequently, she found out using her internet banking that before the notification took place someone has made an ATM withdrawal of CZK 10.000 using the credit card. The bank refused to reimburse the complainant of the loss.

The Financial Arbitrator found out that the wallet was stolen on 25^th February 2011 approximately at 10:00 in the mall in Prague. At 10:05 the withdrawal was made from the ATM in the same mall using the PIN code correctly entered on a first try. At 10:45 the complainant notified the bank of the theft. Based on the CCTV record made by the ATM, the Financial Arbitrator found out that the withdrawal has been made by a person different from the complainant – probably a thief. As the complainant did not provide her consent with the transaction, an unauthorized payment transaction was concerned in the sense of Sec. 98 of the Payment System Act. The Financial Arbitrator therefore dealt with the question of liability of the bank.

Pursuant to Sec. 116 of the Payment System Act the payer (i.e. the complainant) shall bear the loss related to an unauthorized payment transaction if he/she incurred it by acting fraudulently, or by failing to fulfil one or more of his/her obligations under Sec. 101 of the same act with intent or gross negligence, e.g. his/her obligation to take all reasonable steps to keep the personalized security features of the payment instrument safe (particularly the PIN code). Although the complainant asserted not to have made any written note of the PIN code, out of the CCTV record and the testimony it followed that the thief used the PIN code which was obviously written on a piece of paper placed in the wallet along with the credit card.

The Financial Arbitrator held that the complainant was liable for the loss related to the unauthorized payment transaction herself as she had not protected the PIN code sufficiently and the withdrawal had been made before she had notified the theft to the bank.