Unauthorized card withdrawals: Bank Mizrahi ordered to compensate a customer it filed a police complaint against

Background and facts: withdrawals from the account that the customer did not make

The details here are based on a report on Bizportal of January 25, 2007. The original report in TheMarker was not accessible, and the full text of the judgment was not found openly online. The report does not state the name of the court, the judge or the case number.

According to the report, the customer held a private account at Bank Mizrahi in the Ramat Gan branch. While browsing the bank's website he discovered withdrawals of about NIS 10,000 over three days. He contacted the bank's security department and asked to cancel the card.

The next day he filed a complaint form. According to the report, the bank's representative replied that the bank usually returns funds in such cases, but charges a deductible of 25%. The customer refused and filed a complaint with the police.

In an internal investigation, a bank investigator claimed that the customer had tried to obtain funds from the bank by fraud. The bank filed a police complaint against him, and he was summoned for questioning. About three months later the file was closed on the ground of "offender unknown".

The parties' arguments

The customer sued for NIS 110,000. He asked for the return of the funds, and for compensation on causes of action of defamation and negligence in the investigation and in the police complaint. According to the report, the card used to withdraw the funds had been swallowed by a Bank Hapoalim machine and was not located.

What the court held

According to the report, the court held that the attempt to charge the plaintiff with Bank Hapoalim's failures was out of place. It was convinced that neither the plaintiff nor anyone on his behalf withdrew the money. It was held that under the Debit Cards Law the bank should have returned the sum no later than 30 days after the notice.

The court relied on Supreme Court case law, under which a person who files a police complaint on the basis of suspicion alone, without a reasonable check, may be liable in tort. It was held that the bank was negligent and acted contrary to the banking practice of checking thoroughly before filing a complaint against a customer.

According to the report, the bank was ordered to return NIS 10,000, to pay NIS 35,000 in compensation for distress and NIS 35,000 in legal fees.

What it means for Mizrahi Tefahot customers

The report describes the bank's duty to return withdrawals not made by the customer, under the Debit Cards Law, and the risk in a police complaint without a check. A customer who discovers withdrawals he did not make can report to the bank in writing and keep the confirmation of the request. More cases appear in the rulings database.

Sources

• Bizportal: Mizrahi Tefahot will compensate a customer over a baseless suspicion of fraud, January 25, 2007

Frequently asked questions about court rulings against Mizrahi Tefahot Bank

The full text was not found openly online; details according to a report, not yet verified against the text of the decision

How to cite

Case number not stated in the source, Tel Aviv Magistrates' Court. Source: Net HaMishpat (Israeli courts database), case Case number not stated in the source.