Commonwealth Bank has been fined $150,000 for increasing a customer's credit card limit despite the customer warning them he was a problem gambler.
The Federal Court heard that during a phone conversation in October 2016, Harris (David Harris) made it clear that he did not want any further increases until he could control his gambling addiction, but the bank increased Harris's limit anyway.
"I had three credit cards before and they asked me to max it out by swiping more cards and combine them into one... and then gave me more money," he told staff.
"I really don't understand that they knew I was addicted to gambling and I was swiping my card obviously to gamble or something like that, but they still did it."
"I think it's really terrible that they provided me with such a service when I clearly have a gambling problem."
But the bank did not formally record his relevant application requirements, nor did it forward it to the credit decision-making system. Therefore, 10 days later, Harris received a letter inviting him to increase the limit from A$27,100 to A$32,100.
Mr Harris was physically and mentally exhausted, had trouble sleeping and began to feel depressed and anxious.
Just a month later, he received another quota increase invitation, this time the quota was 35,100 Australian dollars.
Judge Bernard Murphy pointed out that at that time, the maximum limit on the credit card offered by Commonwealth Bank of Australia (CBA) was A$8,000.
The following month, Harris accepted the offer and owed $35,706.91 and failed to repay the minimum repayment of $699.
Judge Murphy said: "If he had no additional charges on his credit card and only paid the minimum repayment each month, it would have taken him 137 years and 10 months to pay off the balance."
He could only continue to pay off his credit card because he worked long hours with no days off, six to seven days a week, doing the manual labor of a roofer.
"He also relied on money won from gambling and money borrowed from his employer."
Mr Harris was physically and mentally exhausted, had trouble sleeping and began to feel depressed and anxious.
Judge Murphy found that CBA breached responsible lending terms and gave four reasons, including failing to conduct a reasonable inquiry into whether Harris still believed he was a problem gambler.
The Australian Securities and Investments Commission alleged the breaches were the result of inadequate problem gambler notification systems and processes, which the CBA admitted.
CBA's credit card practices are the subject of a case study by the Royal Bank Commission.
Since then, the law has changed to prohibit proactive credit limit increases.
Additionally, credit card contracts or credit limit increases must be considered unreasonable if there is a risk that the consumer will not be able to repay within three years.
ASIC noted that the bank had taken steps to finalize a difficult arrangement with Harris and introduced measures aimed at tackling gambling-related issues, as well as wider measures to help customers manage their credit cards.
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