MBNA has overcharged its customers by €18m!

[dtlyn]

My MBNA credit card funded my college excesses between 03 and 07ish.. but I have since paid off and closed it. However, I was overlimit a few times (and charged for it) and paid interest on a significant balance. Also, due BOI laziness I sometimes incurred late charges. I would occasionally withdraw cash from the ATM also.

I've kept most of my statements (I knew it would be handy!) but I'd be interested in

a) Seeing if they get in touch at all, considering the account has been closed for over a year .
b) Getting a handle on exactly what the calculation error is and running through it myself.

1. Interest charged for the period between the transaction date and the
statement date
2. Interest charged on non retail purchase (i.e. ATM or cash withdrawal)
transactions where the customer has not made a prior card purchase.
3. Interest charged where a customer has been a full balance payer for at least two consecutive months

The first 2 above would have been common scenarios (I expect) on people carrying full balances or near-to-full balances. Possibly 3 would apply in the case where loans may have been drawn elsewhere to pay off full balances.

Therefore I agree with Brendan's assertions and am very eager to see how this plays out.

 

[Papercut]

Something similar arose with AIB credit cards back in 2006. I got a letter from them stating that following a comprehensive examination of fees & charges applied to all of their products, they had discovered that they had incorrectly calculated cash advance interest charges on Low Interest & Budget MasterCard accounts from 2001 to 2004. I received a credit of about $20.00 at the time, which comprised of €13.00 for the actual miscalculation & €7.00 interest.

As far as I can remember the ‘comprehensive examination’ stemmed from the discovery that they had overcharged many customers for foreign exchange transactions.

It does go to show that the automated interest & fees charging system of any financial institution is only as good as the way it is programmed/set-up to begin with, though it’s amazing how these things don’t seem to be checked on a regular basis by internal audit departments. It’s funny how these sort of errors never seem to be in the customer’s favour.

 

[dtlyn]

It does go to show that the automated interest & fees charging system of any financial institution is only as good as the way it is programmed/set-up to begin with, though

Some of these calculations are very complex (with accuracy of calculation being quite a particularly difficult thing to pin down), difficult to capture in computer systems and this is often amplified by the volumes of the transactions. While understandable, however, that is not really excuse for inaction or proper testing and controls.

it’s amazing how these things don’t seem to be checked on a regular basis by internal audit departments. It’s funny how these sort of errors never seem to be in the customer’s favour.

I would say that is because error's in the companies' favor would be written off in most circumstances. Can you imagine the uproar if MBNA went chasing customers if they had undercharged interest?

I would say that as long as the company is honest and open with customers, and once discovered prioritizes reimbursement programmes, then that's all you can ask.

The question is are MBNA being honest and open and will they reimburse fairly?

My guess is from an accounting perspective, they will, however on an earlier point made by Brendan, compensation for arrears harassment or otherwise intangible side affects of this case will be ignored by MBNA and the FR.

 

[Papercut]

I received a letter today from MBNA about this issue. The wording is much the same as the press release.

''We are now in the process of assessing the effect on each of our customers' accounts and will consider your account as part of this process. No action is required by you at this time and once our assessment has been completed we will be in a position to confirm the extent to which your account may have been affected by this, if at all.''

So, at least they seem to be on the ball as regards contacting customers.

 

[Aimee]

I paid off my credit card with MBNA in December 2007 and I received a letter from them today confirming they are looking into matter as per previous page and a refund will issue together with interest if applicable.

 

[jhegarty]

Got the same letter myself.

I notice the letter only mentions interest and not penalties. I seem to remember going over my credit limit by €5 and been charged a penalty.

This refund would possibly mean I didn't go over the limit that time.

 

[bond-007]

No letter received here.

 

[Bronte]

No letter received here.

You're in the special category batch of letters, the one marked "watch this one he knows how to calculate interest, has kept all paperwork and could be a bit of bother so handle extra carefully" .

 

[bond-007]

Very good.

 

[Blackberry]

Some of these calculations are very complex (with accuracy of calculation being quite a particularly difficult thing to pin down), difficult to capture in computer systems and this is often amplified by the volumes of the transactions. While understandable, however, that is not really excuse for inaction or proper testing and controls.

The issue at present has nothing to do with the computer systems. It appears they were calculating correctly but incorrect terms and conditions were sent out to cardholders.

 

[Papercut]

Some of these calculations are very complex (with accuracy of calculation being quite a particularly difficult thing to pin down), difficult to capture in computer systems and this is often amplified by the volumes of the transactions. While understandable, however, that is not really excuse for inaction or proper testing and controls.

The issue at present has nothing to do with the computer systems. It appears they were calculating correctly but incorrect terms and conditions were sent out to cardholders.

There are two issues:
1)A drafting error in the way that interest charges were laid out in their terms & conditions affecting accounts between 1st July 2007 & October 2009. Some transactions may have been charged at the wrong interest rate.

2)Rates of interest charged on the Govt Levy on accounts going back to 1997. Some accounts may have been charged cash transaction interest rates instead of retail transaction rates.
This was caused by a computer programming error.

All accounts will have to be examined to ensure that the correct interest rates were charged. Any errors will be corrected & adjusted to the correct interest rate that should have been applied & refunds which will include interest to date will be issued to all existing & previous customers.

 

[dtlyn]

Some of these calculations are very complex (with accuracy of calculation being quite a particularly difficult thing to pin down), difficult to capture in computer systems and this is often amplified by the volumes of the transactions. While understandable, however, that is not really excuse for inaction or proper testing and controls.


The issue at present has nothing to do with the computer systems. It appears they were calculating correctly but incorrect terms and conditions were sent out to cardholders.

..and further to Papercuts reply if the computer systems are not calculating interest in accordance with the terms and conditions (drafted incorrectly or otherwise) then they are not working correctly.

 

[bond-007]

Got the letter today.

 

[Blackberry]

..and further to Papercuts reply if the computer systems are not calculating interest in accordance with the terms and conditions (drafted incorrectly or otherwise) then they are not working correctly.

MBNA never said there was an issue with their systems, what they did say and I quote from their own press release

"We have identified an error in the way the charging of interest
was described to customers in the terms and conditions of our credit card product."

 

[Papercut]

MBNA never said there was an issue with their systems, what they did say and I quote from their own press release

"We have identified an error in the way the charging of interest
was described to customers in the terms and conditions of our credit card product."

They did to me when I rang them. If you are in any doubt you should ring & hear it from the horse’s mouth.

As I have already posted:

There are two issues:
1)A drafting error in the way that interest charges were laid out in their terms & conditions affecting accounts between 1st July 2007 & October 2009. Some transactions may have been charged at the wrong interest rate.

2)Rates of interest charged on the Govt Levy on accounts going back to 1997. Some accounts may have been charged cash transaction interest rates instead of retail transaction rates.
This was caused by a computer programming error.

Freephone: 1800 818 704

 

[Blackberry]

They did to me when I rang them. If you are in any doubt you should ring & hear it from the horse’s mouth.

Freephone: 1800 818 704

Thanks Papercut.......Don't need to ring them........Not foolish enough to have a card with them!!!!

 

[Papercut]

Thanks Papercut.......Don't need to ring them........Not foolish enough to have a card with them!!!!

No problem Blackberry….I wasn’t implying that you were foolish in any way – be that foolish enough to have a card with them or foolish enough to post misinformed information about them…I was merely clarifying the facts regarding their computer programming error!!

 

[Brendan Burgess]

[broken link removed] in today's Irish Times, reports that the Consumer Panel of the Financial Regulator has asked to meet the Financial Regulator about this.

Mr O’Rourke [Chairman of the Consumer Panel] is seeking a meeting with the regulator over the €18 million being repaid by credit card company MBNA to customers it overcharged.


The panel wants to know why MBNA was not fined for overcharging when much smaller operators are penalised for minor infractions.

 

[bb12]

Just wondering if anyone had had any refunds or any further information about the overcharging from MBNA yet? I received a letter at the time also, but haven't heard anything back from them since.

 

[Wishes]

I haven't heard a word since the letter and haven't received any refund. I thought we were meant to be credited by now.