Last week, two stories involving bank IT errors—one in Australia and the other in the U.K.—caught my eye. In the first, as reported by the Brisbane Times, a couple from Brisbane, Australia, were sentenced to jail for four years (with 37 months suspended) for credit card fraud. According to the Times, the wife applied for a credit card from the Bank of Queensland in May 2002 so that her husband could buy a lawnmower to start up his own landscaping business. The bank soon issued her a card with a credit limit of A$3000.
When the couple went to pay off their credit card balance at the bank, a clerk informed them that they owed A$375. The couple told the clerk that the amount couldn’t be correct, but according to the couple the clerk told them, “Computers don’t lie.”
Knowing that they owed more than the A$375, the couple, the Times story says, figured that there must be a bank computer glitch somewhere, whereupon they decided to keep quiet and test whether their supposition was indeed correct.
Apparently it was. And over the next six years, the couple was able to use the credit card to purchase some A$313 000 (not including another A$31 600 in interest payments) worth of merchandise and other sundries, including a new car, jewelry, furniture, trips and other forms of entertainment. They would have spent more, but they kept hitting their credit limit, which over the six years was raised from $3000 to $7000. According to the Times, the couple exceeded their $7000 credit limit about 20 times.
(Gee, if they had managed their credit limit a bit better, they probably could have gotten the bank to raise their credit limit to $15 000 or more.)
The beginning of the end came in the summer of 2008, when a steel trading company conducted an audit of its Bank of Queensland business account as every month funds kept disappearing mysteriously from it. When the company complained to the bank, the bank began an investigation, reimbursed the steel company for the missing funds, and contacted the police.
For a reason not explained in the article, it wasn't until August 2010 that the police searched the couple’s home and seized their bank statements and the credit card.
The Times states that the husband reportedly told the police during questioning that he, “believed a deceased relative may have set up a trust fund for them without their knowledge.” Hmm, maybe it was one of those nice “lawyers” who keep sending me emails telling me I have inherited a fortune from some obscure family member living in some obscure country I never remembered ever hearing about growing up.
Ultimately, the Times states, the “fairy godmother” excuse didn’t stand up under scrutiny and the couple confessed. Helping to keep their jail time to a minimum was the fact that they repaid the bank A$312 000 by selling off all their legitimately-owned assets.
Turning to the U.K., a story at This is Somerset, reported that an elderly couple with a spotless credit history had been placed on a debtors’ blacklist by their bank, NatWest. They only found out about it when “they suddenly started receiving letters and telephone calls out of the blue from utilities, insurance firms and other companies because their direct debits had been cancelled.”
Shocked, they immediately went to the local NatWest branch office where they were told that the problem must be of their own making—probably because they had overdrawn their debit account. The couple vehemently denied that was the case, and after a week of persistent calling and letter writing, the bank finally admitted that a “glitch in the system” had somehow cancelled all their direct debits and put them on the blacklist.
The bank apologized to the couple, gave them a bouquet of flowers and credited £25 to their account to cover their costs. Nothing like going all out. It also promised to ensure that the couple’s credit rating and payment reputation weren’t affected; given the plight of those in similar circumstances in the US , they are rightly worried.
Probably more disconcerting is that the bank says it still does not know how it happened, and by implication, whether it has happened to any of its other customers as well. Perhaps NatWest should start stocking up on more flower bouquets just in case.
Finally, in a related IT glitch story, there was a long article in this weekend’s New York Times about the rise of medical billing errors and how these are negatively affecting patients’ credit ratings, often without them knowing about it until years later. The New York Times story says that an estimated 9.2 million patients in the US were contacted in 2010 by a collection agency in regard to an unpaid bill that was in fact a billing mistake. That number is expected to keep rising as healthcare providers get more aggressive about getting paid for their services and the process for determining how and by whom patient claims should be paid grows increasingly complex.
Robert N. Charette is a Contributing Editor to IEEE Spectrum and an acknowledged international authority on information technology and systems risk management. A self-described “risk ecologist,” he is interested in the intersections of business, political, technological, and societal risks. Charette is an award-winning author of multiple books and numerous articles on the subjects of risk management, project and program management, innovation, and entrepreneurship. A Life Senior Member of the IEEE, Charette was a recipient of the IEEE Computer Society’s Golden Core Award in 2008.