The Independent (UK)
Wednesday, August 12, 1992

Banks face legal challenge over cash card fraud

by Susan Watts

People convinced they have lost money through cash dispenser fraud could have a novel computer system to thank if they succeed in legal action against their banks due to start tomorrow.

Alistair Kelman, a barrister acting for aggrieved customers in a case against seven high street banks and building societies is using computer software to spot patterns in the way unauthorised transactions take place. Mr. Kelman has built up a computer database holding information on more than 400 cases. His "relational" database allows him to cross-correlate the place, date, and time of mystery cash withdrawals. He hopes to match cases with similar characteristics in a way that he says the banks have so far failed to do. The database will let him analyse "the spider's web" of automatic teller machines across Britain, he said.

"I don't think the banks are capable of doing what we are doing. They would only have the pattern of their own branch or their own banking network." Rebecca Evans, a barrister working for the Consumers' Association, said she had already noticed that victims often lived in the same area. Banks have also claimed phantom withdrawals occur near the victims' local cash machine, implying that their personal identification number has been passed on or stolen. She said the database should help to support or dispel such theories.

Mr. Kelman believes the case is unusual in that it enlisted help from thousands of interested observers via a computer "conference" on the Compulink Information Exchange. This type of electronic message service lets people add their ideas to computer-based "conversations" via telephone data links.

Mr. Kelman said the case had attracted about 5,000 contributors including policemen, people offering advice on how to make phantom cash withdrawals, and others who had had first-hand experience of cashcard theft. One story added to the computer bulletin board recently was from a man claiming his high street bank account was debited from Scotland while he was sitting an exam in Chester with the card on his desk as proof of identification. The bank involved paid up almost immediately, despite the banks' persistent claim that their machines are infallible.

Mr. Kelman said that linking the cases via his database has enabled him to bring a "group action" against the financial institutions.

Denis Whalley, associate solicitor at Keith J Park in Merseyside who is preparing the cases, said Mr. Kelman's approach had helped him secure legal aid for many of the plaintiffs even though most were claiming less than £1,000, which would normally be too small a claim to qualify. He intends to issue writs on 10 cases tomorrow, then add to these over the following months to work towards a full trial next summer.

Mr. Whalley said the banks had become more willing to pay up as his court case approached. But a spokesman for the Association of Payment Clearing Services, the banks' cheque clearing system, insisted yesterday that the banks were confident in the security of their computer systems and fully prepared to face the court action.

Copyright © 1992 by The Independent. All Rights Reserved. Reprinted with permission.