CBA Fined $150,000 For Lifting Known Problem Gambler’s Credit Limit

The Commonwealth Bank of Australia has been fined AUS$150,000 (US$107,053) by the Federal Court on October 22 for increasing a problem gambler‘s credit card limit.

The bank has breached the National Consumer Credit Protection Act 2019, the Federal Court said.

Federal Court Slams CBA

The customer, David Harris, had warned the bank of his gambling addiction in October 2016. The CBA was aware Mr. Harris did not wish to lift his credit card limit until he got his addiction under control, therefore breaching section 133(1) of the Act.

However, the CBA agreed to increase Mr. Harris’ credit limit when he requested it in January 2017.

Mr. Harris had maxed out three credit cards that the bank then combined into one. His limit was initially increased from $27,100 to $32,000. He later received a letter offering to increase it by another $3,000, despite the CBA’s maximum credit card limit of $8,000.

Justice Bernard Murphy said it would have taken Mr. Harris 137 years and ten months to pay off the $35,706.91 debt with minimum repayments and no additional charges.

CBA Failed to Check on Problem Gambler

The Federal Court said the CBA failed to assess the situation and to inquire about the customer’s problem gambling before providing the funds (under section 130(1)(a)). The CBA also failed to verify his financial situation and if he was still using his credit card to gamble (under section 130(1)(c)).

Mr. Harris continued to have a gambling problem when the CBA made additional funds available. The bank, therefore, breached section 131(1) by not assessing what the money would be used for. By not making the necessary verifications, the CBA also breached section 128(d).

Hardship Arrangement Between The Customer And The Bank

The Commonwealth Bank Australia said the affair was a result of inadequate gambler notification systems.

As recognized by Justice Murphy in his judgment, the CBA has taken corrective measures to finalize a hardship arrangement with Mr. Harris and has introduced a series of measures intended to address issues associated with problem gambling as well as broader measures to assist customers to manage their credit card expenditure.

Australian Banks Increase Consumer Protection

The Australian Banking Association initiated last December a consultation on potential measures regarding the use of credit cards to finance online gambling which ran until 4 March.

National Australia Bank became the country’s first bank to give its clients the option to block gambling transactions via its mobile app. Bank Australia revealed a similar strategy last month. The consumer-owned group will no longer allow account holders to use their credit cards to fund gambling.