The Debt Panel: 'My bank is ignoring a fraudulent transaction on my card'

In 2021, I had a credit card and owed an outstanding amount of Dh22,000 ($5,990).

When I came to know about the acquisition of the card's issuing bank by another lender, I decided it would be wise to pay it off. After clearing the dues, I retained the card but stopped using it.

However, a few months later, I noticed a fraudulent transaction on my card amounting to Dh12,000. When I received an SMS from the bank with a one-time password, I immediately called the bank to block the card.

The customer service agent instructed me to fill out a dispute form and promised me that the fraudulent transaction would not go through as the card had been blocked.

However, a few days later, I noticed that the money had been deducted from my account.

The bank acquisition had been completed by then. I contacted the bank again and they advised me to fill out a new dispute form and also register a police complaint. I followed their instructions.

It’s been nearly two years and my money has not been refunded. However, I recently received an email from the bank about imposing a travel ban and a civil case against me for unpaid dues.

How can I resolve this situation? I don’t want to pay for a transaction that I didn’t authorise. JK, Dubai

Debt panellist 1: Steve Cronin, founder of DeadSimpleSaving.com

You were right to be cautious about bank mergers and acquisitions. A lot of customer data can get lost in the process, especially if your bank’s data is being transferred to another bank’s systems.

Even worse, we have seen the reappearance of “zombie” cards and debt, when a card you thought was closed reappears years later to ruin your credit score, while there is no legacy records of any conversations or actions you took at the time.

Hackers and fraudsters also know that a bank’s systems are particularly vulnerable during the inevitable disruption of an acquisition, so they will take aim at that bank’s customers in any way possible.

The mistake you made here, after settling the card, was not to close it and get a letter of no liability.

It is not clear how the money was deducted from your account, given you did not enter the OTP and blocked the card. Sometimes, SIM cards can be copied to get access to those passwords.

Do you have any record of correspondence with the bank: what you said and what they instructed you to do?

If the customer service agent wrote the instructions down for you in an email or chat, it will strengthen your case that you did everything asked of you and the bank did not.

In addition, any written confirmation from the bank that you reported a fraud and blocked the card will provide proof that this transaction was not initiated by you and you should not be responsible for the resulting debt.

You should at least have documentation for the police complaint, or the police station may be able to find it for you.

As two years have passed, it may be difficult for you or the bank to find the right information. Did you ever contact the bank to follow up progress for the refund? Prepare a document with a timeline of your actions and the bank's actions.

A travel ban and a civil case seems aggressive for a Dh12,000 debt, though with interest this may have increased considerably.

You now need to take action and defend yourself robustly, otherwise you could find yourself with a terrible credit score and a pending court case.

With your documentation assembled, contact the bank through several channels. Call the card department. Visit your branch and insist on speaking to the branch manager.

Go to the bank’s HQ and insist on speaking to a loan officer or collections department manager in person. Now is not the time to be timid — your finances and reputation are at stake.

Watch: UAE's national fraud awareness campaign to curb email scams

Lay out in writing your issues and concerns, then give the bank a 30-day ultimatum to resolve the situation.

Make it clear that if they fail to act, you will go the UAE Central Bank's Consumer Protection Unit and will engage a lawyer.

Be a pain, so that it is less of a hassle for the bank to resolve the case with you than to facelessly threaten you without acknowledging your situation.

If, after 30 days, the bank has not responded to your satisfaction, update your documentation with all the correspondence you have had with the bank and go to the UAE Central Bank.

You can contact UAE Central Bank via its website, phone or branch, but you must wait until the bank at fault has had 30 days to respond to you.

Legal challenges are rarely successful in these situations, but you may want to speak to a lawyer about your situation. You might be able to find one through your community.

Debt panellist 2: Carol Glynn, founder of Conscious Finance Coaching

I'm so sorry to hear about your situation. Dealing with fraudulent transactions on your credit card can be stressful and it is understandable that you want to avoid paying for an unauthorised transaction.

It is surprising the transaction went through if you did not provide the OTP.

Unfortunately, banks in the UAE do not have to reimburse customers who have willingly given out their card details through negligence.

Hopefully, this is not the case for you and the OTP was not provided to the fraudsters.

Many banks require you to pay in full while an investigation is ongoing.

While this is frustrating, it also prevents incurring interest, charges and, in this case, a potential police report and travel ban for non-payment.

If you have the cash available, I would recommend considering paying the debt to prevent the bank pursuing a travel ban. At the same time, continue to pursue a refund of the transaction, including any fees or charges.

Here are some steps you can take to resolve the situation:

Contact the bank: Reach out to the bank again and explain your situation. Provide them with any reference numbers or documentation related to the disputed transaction and the police complaint you filed. Ask them to investigate the matter and provide you with an update on the status of your case. It may also be helpful to ask for a specific point of contact to follow up with.

Watch: UAE's national fraud awareness campaign targets Sim card scams

Consider seeking legal advice: If you're not getting any resolution from the bank, it may be time to seek legal advice. A lawyer can help you understand your rights and options, and can assist you in taking legal action if necessary.

File a complaint with the UAE Central Bank: The UAE Central Bank has a Consumer Protection Department that handles complaints related to banks and financial institutions. You can file a complaint with them 30 days after you register an official complaint with the bank and it remains unresolved.

Negotiate a settlement: If you did inadvertently provide the OTP to the fraudsters, and the bank is unwilling to refund the disputed amount, you may want to consider negotiating a settlement. This could involve agreeing to pay a portion of the disputed amount in exchange for the bank dropping the case against you.

It's important to be persistent and patient when dealing with a situation like this. Keep records of all your communications with the bank, and follow up regularly to ensure that your case is being investigated. Good luck!

Debt panellist 3: Alicia Alonso, lawyer at BSA Ahmad Bin Hezeem & Associates

Along with advancements in technology, comes an advancement in fraud via technology. It is truly an unfortunate situation you find yourself in.

The first step you should take is to escalate your complaint to the UAE Central Bank and seek legal advice immediately.

Hire a lawyer and grant them the power of attorney via public notary. They will then be able to manage your financial affairs.

A good place to start would be to investigate your bank’s legal obligations in the event of fraud.

Banks have security systems in place to detect fraud. They are subject to professional standards and owe their clients a duty to detect and investigate fraud.

The onus also lies with the bank to prove that the transaction was not fraudulent. As this is a technical matter, you should request an appointment with an expert to investigate the fraudulent transaction.

Assuming that the email the bank sent you is a warning of a looming travel ban and civil case in the event of continued unpaid dues, you could also file a civil case against the bank, which costs Dh12,000 plus interest and any court fees.

Article 22 of Federal Law No 35 of 1992 entitles you to do so.

If you want to avoid the travel ban and having a civil case filed against you, an alternative option would be to pay the unpaid dues and then launch a civil case against the bank for the aforementioned amounts and add-ons.

However, this is only an action to take if the travel ban is imminent and you urgently need to travel.

Further, this option assumes you are financially able to pay the required sums.

Your payment to them should be documented with strong disclaimers to the effect that the payment you are making is not an admission of liability; that it is only to avoid a wrongful travel ban being imposed, and that you will be claiming the damages from the bank for its actions.

Whether or not the travel ban has been imposed or is imminent, you should get in touch with a lawyer who can communicate with the bank on your behalf.

In case the matter proceeds to court, a lawyer will be able to represent you and hopefully secure a favourable outcome. In that case, a counterclaim against the bank would certainly be warranted.

There are three ways in which the bank could be found liable for damages.

Firstly, they negligently failed to perform their professional duties which, absent failure to do so, would have revealed the fraud.

Secondly, as an accessory, requiring dishonest assistance in breach of fiduciary duty/trust.

Lastly, there exists an implied duty on banks to spot whether their client has dishonestly given instructions. This is known as the Quincecare duty. Here, the first would apply.

Banks must refrain from making a payment where there is reasonable belief that the payment could be fraudulent to the client.

The mere fact that you filed dispute claims, repeatedly contacted the bank to inform them of the fraud, froze your card and filed a police report should be grounds enough for constituting a reasonable belief that the payment could be fraudulent.

The failure of the bank to act on that reasonable belief resulted in you suffering from a loss for which you are entitled compensation.

You may find that a strongly worded notice to the bank, sent by a law firm, would trigger that bank into seriously reconsidering their course of action — and may resolve the issue entirely.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to pf@thenationalnationalnews.com