CREDIT card firm MBNA came under fire yesterday after it revealed it had overcharged its customers by €18 million.
The company apologised for the errors which led to the overcharging, which occurred because of two separate drafting mistakes dating back to 2007 and 1997.
MBNA said “tens of thousands” of customers have been affected, but said it could not provide a definitive figure until it goes through the slow process of revisiting every credit card transaction on every customer credit account dating back to 1997.
For that same reason, the company said, it will be March before all affected customers will receive the money they are owed, plus interest.
The Financial Regulator was made aware of the drafting error dating from June 2007 back in September this year, but the case only came to light yesterday. The earlier error was only uncovered thanks to a review of procedures made in light of the discovery of the more recent mistakes of 2007 which led to the overcharging of customers.
The Regulator is making its own review of MBNA’s internal procedures, while the company could also face the possibility of a multi-million euro fine.
There were two errors which led to the overcharging: one in which interest was mistakenly applied between the date a consumer bought a product and the date it issued a statement to customers; and in other cases where there was an error in how MBNA charged for cash withdrawals and for the Government’s credit card levy.
Any credit card carrying the MBNA symbol could have been caught up in the overcharging, although the company said the majority of customers affected by the errors were likely to receive a refund of around €38 or less.
In a statement MBNA said: “A drafting error within our terms and conditions from 2007 prevented us from applying interest to accounts in certain circumstances; however, interest was applied in these circumstances in error and this was not in accordance with our terms and conditions.
“When this issue was identified, we immediately conducted a full review of all our terms and conditions stretching back to 1997. As a result of this we discovered an additional error and, therefore, we will refund any interest which may have been applied on the annual Government Tax charged on accounts up to 2007 on the basis that we didn’t set out how interest would be applied.”
A spokesperson for the Financial Regulator said: “The Financial Regulator is satisfied with how this matter is now being dealt with and it is engaging with the firm to ensure that procedures and remedial action is undertaken to prevent this type of issue reoccurring.”
* MBNA Europe Bank Limited, Freepost, Reference IR2BMB1/2 PO Box 25, Carrick-on-Shannon, Co Leitrim; or call 1800 818704.
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