The latest news from Banking Mistake Land involves faulty ATMs in Sydney. The ABC reports:
Consumer groups are calling on the Commonwealth Bank to explain what went wrong with its ATMs on Tuesday, with a glitch resulting in some customers withdrawing excessive amounts from the machines.
Police charged two men in Sydney on Wednesday with fraud for allegedly withdrawing extra money from the faulty machines during the meltdown.
One of the men, Ertem Poklar, 18, has pleaded guilty and will be sentenced next week.
He was allegedly seen accessing the ATMs at Merrylands at least 10 times and was arrested after being found with $50 in one hand and $1,500 in his shoulder bag.
He told police he was paid the $50 to withdraw the money.
By close of business on Tuesday the faulty ATMs were fixed.
The bank says it is still investigating how many customers were affected by the problems, which also disrupted online and phone fund transfers.
Yes, technically it is a crime to take extra money from ATMs. However, a BBC article on the Commwealth Bank’s woes notes that we feel differently about people who steal from ATMs as opposed to people who steal from real people:
Morally speaking you are doing something wrong, stealing, if you take [the money from the ATM], says Simon Rippon of the Oxford Uehiro Centre for Practical Ethics. But the interesting question is whether this kind of stealing is more excusable than stealing from an individual.
Someone who takes cash from a malfunctioning cash machine is judged more leniently than someone else who takes cash that is accidentally left behind by the person in front of them, and who fails to inform that person of their loss, he says.
“The 18th Century Scottish philosopher Adam Smith, who is best known for his ‘invisible hand’ economic theory, provided a moral theory in his book The Theory of Moral Sentiments that can very naturally explain the distinction between these cases. On Smith’s theory, moral judgements arise out of our sympathy with the feelings of others.”
It’s difficult to identify an individual to sympathise with in the case of the misfiring cash machine, says Rippon, so it is only natural for us to judge the person in that case much less harshly than we judge the person in the second example.
This feeling that a bank cannot be a victim of crime is sometimes felt very strongly. In 2003, a family in Coventry made repeated visits to an obliging cash machine and the four of them took out £134,410, which they spent on a new car and air tickets to Jamaica. Three of them were imprisoned.
It’s a crime to take the money, but there are two reasons why many people instinctively find this kind of theft less serious or even harmless, says Julian Baggini, editor of The Philosophers’ Magazine.
One is that the transaction is completely impersonal and does not require surreptitious behaviour. The other is that people view crime against large corporations as victimless, even though prices and insurance premiums are affected by theft and fraud.
“Leading a moral life requires us to be the kind of person who does the right thing without always stopping to work out if we gain or lose by doing so,” says Baggini.
“We do what is right and hope that others will do the same because we want to be that kind of person, not some kind of egotist who is forever trying to work out what acts will serve our own petty self-interest.”
People who keep money from rogue cashpoints are not modern day Robin Hoods, he says. Theirs is not a principled act but an opportunistic one.
“But any moral indignation should be proportionate. I think given that many people struggle with money, resisting temptation, even if it is the right thing to do, is hard enough for us to understand those who don’t.”
Of course, my interest in this area is primarily in the civil consequences of the glitch. It is suggested that the Commonwealth Bank will definitely have recourse to recover the money from individuals who have taken advantage of the glitch in its computer processes, subject to the defence of good faith change of position.
It’s my theory that one of the reasons behind the rise of unjust enrichment law is electronic banking and the mistakes which arise therein. Seriously! I’ve spoken before about the paradigm case, Chase Manhattan Bank N.A. v Israel British Bank (London) Ltd  Ch 105. In that case, an amount of over US$2million was accidentally transferred to Israel British Bank twice, but before the mistake could be rectified, the IBB became insolvent. Doh! Controversially, Chase Manhattan was awarded a constructive trust (or arguably a resulting trust) over the wrongly transferred money, and thus it was a secured creditor in the insolvency. Lucky for the poor benighted bank employee who made the mistake! Of course, ordinarily there won’t be a proprietary remedy, but nor will there be a need for one: there will simply be a personal obligation to repay the mistakenly paid money.
There are also some Australian cases, including ANZ v Westpac (1988) 164 CLR 662, where an ANZ customer wanted to pay $14,000 to a Westpac customer. The ANZ’s computer system made a mistake and paid $114,000 to the customer. ANZ had legally paid its own money to the Westpac customer, so it sued Westpac for the money. The High Court said that, in principle, ANZ was entitled to recover the money because it had made a fundamental mistake. However, Westpac could rely on the defence of ministerial receipt, as it was an agent receiving money on behalf of a principal (the Westpac customer).
If one took money from an ATM and did not realise that it was paid by mistake, there is a defence of good faith change of position (David Securities). I suspect the gentleman with the shoulder bag filled with $1,500 cash is going to have difficulty in establishing this defence, and that he will simply have to pay the bank back. Should this be all the gentleman has to do, or should he be charged with theft? The moral discussion above suggests that we view people who take from ATMs differently to people who take from individuals, so perhaps he should be extended leniency, particularly if he returns the money. He has probably well and truly learned his lesson. Let it be a lesson to others out there — if an ATM is malfunctioning, don’t simply take the money and tell all your friends — tell a bank employee.
Update: Eoin O’Dell has a detailed post on a similar event in Ireland just before Christmas last year and the possible legal responses. Go have a read.