Thanks Murray. These regulations sound very similar to the Code that
Harold mentioned. As between the bank and the card-holder the bank will
usually be obliged to pay at least up to 50 pounds (as Keith mentioned
applies in the US, though in US $.) But the point of my current interest
is not the situation between the bank and the card-holder (though that
is clearly the more common one); I am interested in seeing if there is a
remedy as between the card-holder and the thief. For the purposes of
this discussion we can assume, if the UK regs applied, that under reg
57(2) there had been a failure to "take all reasonable steps to keep its
personalised security features safe," and that under reg 62(2)(b) this
was due to "gross negligence". So the card-holder will lose their money
if they can't find a remedy against the thief.
Regards
Neil



Neil Foster
Associate Professor,
Newcastle Law School;
University of Newcastle
Callaghan NSW 2308
AUSTRALIA
MC177, McMullin Bldg
ph 02 4921 7430
fax 02 4921 6931

http://www.newcastle.edu.au/staff/profile/neil.foster.html

http://works.bepress.com/neil_foster/

http://simeonnetwork.org/testimonies/119/Neil_Foster









>>> "Cox, Murray" <Murray.Cox@SlaughterandMay.com> 02/07/13 8:53 PM >>>

CONFIDENTIAL EMAIL FROM SLAUGHTER AND MAY - THIS EMAIL AND ANY
ATTACHMENT MAY BE PRIVILEGED

For the position in the UK, have a look at Part 6 of the Payment
Services Regulations 2009.
http://www.legislation.gov.uk/uksi/2009/209/part/6/made.



________________________________

From: Andrew Tettenborn [mailto:A.M.Tettenborn@swansea.ac.uk]
Sent: 07 February 2013 09:51
To: Sarah Green
Cc: John Randall QC; Nathan TAMBLYN (Faculty of Law); Neil Foster;
obligations@uwo.ca
Subject: Re: Conversion of credit card?


I take Sarah's point (as anyone interested in conversion is always
well-advised to do). But

(1) If the account is overdrawn what's the chose in action involved?
(2) Conversion involves complete destruction or exclusion: partial
damage or impairment of use won't do. Suppose I have £1,000 in my
account and the fraudster withdraws £500. Here we have neither complete
destruction nor complete exclusion. True, in theory you can divide up my
£1,000 balance into 2 tranches of £500 and say one of them has gone
while the other remains: but that's not very convincing.

Andrew



On 07/02/13 09:29, Sarah Green wrote:


It should be a conversion in my (probably deeply unpopular) view
- by analogy with the cases mentioned by John and, on the basis that a
chose in action has only one "life". Once it has suffered an
interference which exchanges it in favour of an employment of the same
value elsewhere, it disappears. In other words, where an interferer
uses such a chose as a means of exchange in his own favour, what
actually happens is that the original chose in action ceases to exist.
As with all transactions of the this type, the original chose is not
assigned to anyone, but extinguished in favour of the creation of a new
chose in action elsewhere. This is a process of novation rather than
transfer. So, even in circumstances in which the customer is
indemnified, the practical effect of this is that it creates a chose in
action of the same value: it is not possible for it (or for anyone) to
recover the original chose in action. In terms of the chose of action
which was interfered with, the original parties to it have both been
excluded from it. This should suffice for a conversion.



I have peddled similar heresies before (LQR sometime last year)
- specifically by way of comparison with theft (which recognises with
apparent ease that one can be permanently deprived of such a chose,
despite tort's current refusal to accept that one can be excluded from
the same!)



Sarah Green
Fellow in Law
St Hilda's College
Oxford
OX4 1DY

sarah.green@law.ox.ac.uk

01865 286661

http://www.law.ox.ac.uk/profile/sarah.green
________________________________

From: Andrew Tettenborn [A.M.Tettenborn@swansea.ac.uk]
Sent: 07 February 2013 08:48
To: John Randall QC
Cc: Nathan TAMBLYN (Faculty of Law); Neil Foster;
obligations@uwo.ca
Subject: Re: Conversion of credit card?


John must be right where the card is converted. Where it isn't
the action for deceit / fraud, i.e. taking money out of the bank by
defrauding the bank with the knowledge that this will cause loss to the
customer (if for some reason he can't plead "no authorisation") won't
work since this tort requires reliance by the plaintiff: cf Tackey v
McBain [1912] A.C. 186. But there might be an action for misuse of
confidential / private information. Or possibly the economic tort of
causing loss by unlawful means, the unlawful means being the fraud
practised on the bank.

I have doubts whether conversion would work, even if the
(indubitably correct) OBG had gone the other way and allowed the action
in respect of choses in action. Further and better particulars, please,
on what chose in action has allegedly been converted?


Andrew





So far as the common law's response to this problem as
between the credit card holder and the thief/fraudster is concerned,
Neil's suggested analysis (an artificial measure of damages for
conversion of - or possibly only a transient trespass to? - a small
rectangular piece of plastic) could derive some support from cases such
as Morison v London County and Westminster Bank [1914] 3 KB 356 (CA), AL
Underwood Ltd v Bank of Liverpool and Martins [1924] 1 KB 775 (CA) and
Lloyds Bank v The Chartered Bank of India, Australia and China [1929] 1
KB 40 (CA) which apply an artificial measure of damages for conversion
of nearly as small a rectangular piece of paper (aka a cheque) [some
discussion of the same appears at pp36-38 & 184-85 of Sarah Green's and
my book on Conversion].



However as Nathan observes, given the HL's decision to
reject conversion of intangibles in OBG v Allan, even that legal sleight
of hand falls short where there is no physical interference at all with
the credit card itself. Quaere the exact legal nature and extent of a
civil action for "fraud"?



John



JOHN RANDALL QC



St Philips Chambers

55 Temple Row

Birmingham B2 5LS

www.st-philips.com <http://www.st-philips.com/>



Tel +44 (0)121 246 7000 (DDI 246 2126)

Fax +44 (0)121 246 7001

Email jr@st-philips.com <mailto:jr@st-philips.com>




________________________________


From: Nathan TAMBLYN (Faculty of Law)
[mailto:tamblyn@cuhk.edu.hk]
Sent: 07 February 2013 01:53
To: Neil Foster; obligations@uwo.ca
Subject: RE: Conversion of credit card?



The problem becomes more acute when it is not the
physical credit card itself which is stolen, but merely its details.



These cases are often described as 'identity theft',
which I think is a sneaky way of banks transferring the problem onto the
credit card holder. But the problem should not be the credit card
holder's. What happens thereafter is fraud: the thief uses the card
pretending to be the authorized holder when he is not. That fraud is
perpetrated on (i) the credit card company, and (ii) the shop (say)
which takes the card in exchange for goods. The credit card holder is
entitled to say to the credit card company, because it is true, you have
deducted from my account something which I did not authorize, nor given
me anything in exchange, so I will not pay that bill.



What about the allegation that the PIN was not secure?



First, how can the credit card company prove that? Just
because the card was used, I do not think it follows that the PIN was
not secure. Very sophisticated technology exists to obtain PIN numbers.
My credit card was skimmed once and used successfully, and my PIN is
written down nowhere, and known only to me. (Fortunately the bank
blocked the transaction.)



Second, any allegation of tortious negligence on the
part of the credit card holder is irrelevant; when A perpetrates a fraud
on B, any negligence by C is irrelevant to that claim.



Third, perhaps the proper analogy is with someone who
writes a blank cheque then used by a rogue to draw down more money than
the writer anticipated. That, I think, is a breach of contract by the
cheque writer to the bank. So perhaps an insecure PIN is a breach of
contract to the credit card company which, if they can prove it, would
allow them to authorize the deduction.



Finally, how can the credit card holder recover from the
thief? The thief stole from the credit card company. The credit card
holder has to indemnify the company through its breach of contract. The
credit card holder gets subrogated to the position of the credit card
company and can sue the thief in fraud.



Nathan



Nathan Tamblyn



MA (Oxford) LLM PhD (Cambridge) Barrister

Assistant Professor, Director of the LLM in Common Law

Faculty of Law, Chinese University of Hong Kong



www.law.cuhk.edu.hk <http://www.law.cuhk.edu.hk/>






________________________________


From: Neil Foster [mailto:Neil.Foster@newcastle.edu.au]
Sent: Thu 07/02/2013 09:07
To: obligations@uwo.ca
Subject: ODG: Conversion of credit card?

Dear Colleagues;

Occasionally one finds that everyday transactions are
unusually difficult to analyse in tort categories- or perhaps it is a
defect in the law. The question that came up today is, what tort remedy
is available to Y against X where X steals Y's credit card and then
appropriates a large sum of money (say $5000)? I think I can see a way
of arguing that there could be an action in conversion against the
wrongdoer (or trespass to goods) based on the touching or taking control
of the card, and then one could argue that the stolen money was damages
that flowed from that initial wrong. (Let us assume for the moment that
the bank concerned will not provide a refund because, for example, the
PIN was not properly secured.) But this seems very artificial. Perhaps
one could also say that if banknotes were taken from an ATM, then there
is a conversion because the notes at the point of emerging were to be
deemed to be the property of the account holder? (But even that seems a
bit odd.)< /DIV>

One would like to say there is conversion of the value
stolen, on analogy with the rule allowing conversion actions in relation
to cheques, but are there any cases that say so? The difference from a
cheque, of course, is apparent- there is no "face value"- although one
could in theory perhaps regard the card as "worth" the maximum credit
limit. Still, this would be odd where less than the maximum had actually
been spent. Or were the minority in OBG v Allen correct to say that
conversion should apply to intangible property these days since many
people would not physically touch cash in most transactions?

If conversion is not applicable, it seems to me
surprisingly tricky to identify another appropriate tort action (though
perhaps I am missing something obvious.)

Regards

Neil





Neil Foster
Associate Professor in Law,
Newcastle Law School;
Faculty of Business & Law
University of Newcastle
Callaghan NSW 2308
AUSTRALIA

Room MC177,

McMullin Building
ph 02 4921 7430
fax 02 4921 6931

http://www.newcastle.edu.au/staff/profile/neil.foster.html

http://works.bepress.com/neil_foster/

http://simeonnetwork.org/testimonies/119/Neil_Foster















Scanned by MailDefender - managed email security from
intY - www.maildefender.net


--



Andrew Tettenborn
Professor of Commercial Law, Swansea University


School of Law, University of Swansea
Richard Price Building
Singleton Park
SWANSEA SA2 8PP
Phone 01792-602724 / (int) +44-1792-602724
Fax 01792-295855 / (int) +44-1792-295855





Andrew Tettenborn
Athro yn y Gyfraith Fasnachol, Prifysgol Abertawe


Ysgol y Gyfraith, Prifysgol Abertawe
Adeilad Richard Price
Parc Singleton
ABERTAWE SA2 8PP
Ffôn 01792-602724 / (rhyngwladol) +44-1792-602724
Ffacs 01792-295855 / (rhyngwladol) +44-1792-295855






Lawyer (n): One versed in circumvention of the law (Ambrose
Bierce)








***



--



Andrew Tettenborn
Professor of Commercial Law, Swansea University


School of Law, University of Swansea
Richard Price Building
Singleton Park
SWANSEA SA2 8PP
Phone 01792-602724 / (int) +44-1792-602724
Fax 01792-295855 / (int) +44-1792-295855





Andrew Tettenborn
Athro yn y Gyfraith Fasnachol, Prifysgol Abertawe


Ysgol y Gyfraith, Prifysgol Abertawe
Adeilad Richard Price
Parc Singleton
ABERTAWE SA2 8PP
Ffôn 01792-602724 / (rhyngwladol) +44-1792-602724
Ffacs 01792-295855 / (rhyngwladol) +44-1792-295855






Lawyer (n): One versed in circumvention of the law (Ambrose Bierce)








***



SLAUGHTER AND MAY, One Bunhill Row, London EC1Y 8YY
TEL: +44 (0)20 7600 1200 FAX: +44 (0)20 7090 5000

Authorised and regulated by the Solicitors Regulation Authority. Firm
SRA number 55388. A list of partners is available for inspection at the
above address

For more information, including details of our client complaints
procedure, go to www.slaughterandmay.com