From: Sarah Green <sarah.green@st-hildas.ox.ac.uk>
To: Simon Douglas <simon.douglas@law.ox.ac.uk>
Kelvin F.K. Low <kelvin.low@gmail.com>
CC: obligations@uwo.ca
Date: 07/02/2013 14:32:14 UTC
Subject: RE: Conversion of credit card?

But this argument effectively means that the legal result depends upon the discovery of the fraud/interference.  If the customer never discovers the loss, it will never be re-credited, meaning that she has definitely suffered a loss. 

 

When tangible assets are returned after a period of deprivation (Hillesden Securities v Ryjack), not only does this not prevent there having been a conversion, but damages are assessed on the basis of the use value of the asset during the period of deprivation.

 

Why should the availability of return (of something approximating to the original chose in action) preclude there being a conversion during the period of deprivation? 

 

 

From: Simon Douglas [mailto:simon.douglas@law.ox.ac.uk]
Sent: 07 February 2013 12:22
To: Kelvin F.K. Low
Cc: obligations@uwo.ca
Subject: Re: Conversion of credit card?

 

Because the customer has not suffered any consequential loss.

 

The bank has a contractual duty to repay the customer on demand; if the bank pays a third party (the thief) they do not discharge this duty and, hence, still have an obligation to pay the customer the full amount he was formerly credited with. I set this out in a bit more detail in (2011) MLR 327.

 

Best

Simon

 

 

Dr Simon Douglas
Fellow in Law
Jesus College
University of Oxford
OX1 3DW

On 7 Feb 2013, at 12:12, Kelvin F.K. Low wrote:



Dear all,

 

At the risk of exposing my complete and utter ignorance (since I don't dabble in tort law), why can't the customer's losses be claimed as consequential losses in conversion? There is then no need to resort to the cheque cases at all.

 

Cheers,

 

Kelvin Low

Associate Professor

School of Law

Singapore Management University

 

On 7 February 2013 09:53, Nathan TAMBLYN (Faculty of Law) <tamblyn@cuhk.edu.hk> wrote:

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

 

 

 

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.)

 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,