2012 QCCQ 2561, 2012 QCCQ 2561

Begum c. MBNA Canada Bank 2012 QCCQ 2561 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-22-176499-104 DATE: March 29, 2012 ______________________________________________________________________ BY THE HONOURABLE CHRISTIAN M.

TREMBLAY, J.C.Q. ______________________________________________________________________ FARJANA BEGUM Plaintiff - vs - MBNA CANADA BANK Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ INTRODUCTION [ 1 ] The Court has to determine if the Plaintiff has been a victim of a fraudulent utilisation of her credit card in a jewellery store in Bangladesh. [ 2 ] The Defendant, who issued the credit card, pretends the Plaintiff participated fully in that fraud. THE FACTS [ 3 ] On November 18, 2003, Ms.

Begum submitted an application for a MBNA Mastercard credit card (exhibit D-1). [ 4 ] On November 29, 2003, MBNA approved the application for an MBNA Mastercard and allowed Ms. Begum to transfer a loan of $6,500 from an existing credit card to her MBNA Mastercard. [ 5 ] On April 9, 2009, Ms. Begum reported her initial MBNA credit card lost. She was issued a new MBNA Mastercard with a new number, the credit card at issue. The limit of the credit line was $8,400. [ 6 ] On December 27, 2009, Ms.

Begum swiped the credit card at issue only once at Restaurant Dera in Montreal (exhibit D-3). [ 7 ] On January 8, 2010, two persons claiming to be Ms. Begum and her husband, Mr. Hossain, phoned MBNA, advising it that Ms. Begum will be travelling to Bangladesh from January 9 to February 15, 2010. The caller indicated: (

i) the number of the card; (ii) Ms. Begum’s date of birth; and (iii) her mother’s maiden name (exhibit D-4). [ 8 ] On January 14, 2010, Mr Hossain's Desjardins credit card was used for four transactions with Hi-Fashion Galley in Dhaka, Bangladesh, for an amount of $7,979.38. [ 9 ] On January 16, 2010, Mr. Rahman Mollah's (Ms. Begum's father) RBC Royal Bank Visa card was used at Mona Jewellers in Dhaka, Bangladesh, in the amount of $7,676.46. Mr. Mollah is claiming that the use of these amounts was fraudulent. [ 10 ] On January 27, 2010 and February 1, 2010, Ms.

Begum paid off the loan of $6,500 on her credit card. This had the effect of increasing the amount of credit available on her credit card from $1,774.92 to $8,209.12 (exhibit D-3). [ 11 ] On February 2, 2010, Mr. Mollah’s BMO Mastercard was used at Emran Jewellers in Dhaka, Bangladesh, in the amount of $15,819.38. Mr. Mollah subsequently claimed that the use of these amounts was fraudulent (exhibit D-9). [ 12 ] On February 4, 2010, Mr. Hossain was advised of $7,979.38 worth of purchases made on his Desjardins Visa card at a merchant in Dhaka, Bangladesh. Mr.

Hossain is claiming that these transactions were fraudulent (exhibit D-5). [ 13 ] On February 15, 2010, Mr. Mollah’s BMO Mastercard was used at Butterfly Marketing in Dhaka, Bangladesh, in the amount of $7,296.61. Mr. Mollah subsequently claimed that the use of these amounts was fraudulent (exhibit D-9). [ 14 ] On February 15, 2010, Mr. Mollah’s MBNA credit card was used at the Bowling Club in Dhaka, Bangladesh, in the amount of $10,000. Mr. Mollah subsequently claimed that this use of the card was fraudulent. [ 15 ] On February 20, 2010, a person claiming to be Ms.

Begum called from Emran Jewellers in Dhaka, Bangladesh. She provided

MBNA’s representative with (

i) the credit card number; (ii) the credit card’s three-digit security number appearing on its back; (iii) the credit card’s expiry date; (iv) Ms. Begum’s home phone number; (

v) the password (Ms. Begum’s mother’s maiden name); (vi) Ms. Begum’s date of birth. [ 16 ] On February 20, 2010, Ms. Begum’s MBNA credit card was used to make $8,759.76 worth of transactions at Emran Jewellers. [ 17 ] On February 20, 2010, the credit card issued to Ms. Begum by T.D. Canada Trust was used for three transactions totalling $8,522.19 at Emran Jewellers in Dhaka, Bangladesh. Ms Begum is claiming that these transactions were fraudulent (exhibit D-8). [ 18 ] On February 21, 2010, Ms.

Begum was advised by MBNA that her credit card was used for transactions made at Emran Jewellers in Dhaka, Bangladesh. [ 19 ] On February 24, 2010, Mr. Mollah’s BMO Mastercard was used at Dominous Pizza in Dhaka, Bangladesh in the amount of $3,476.67. Mr. Mollah subsequently claimed that the use of these amounts was fraudulent (exhibit D-9). [ 20 ] On March 6, 2010, Mr. Mollah contacted MBNA upon receipt of his statement to claim that his MBNA card was fraudulently used. [ 21 ] In March 2010, Plaintiffs claim they went to T.D. Canada Trust branch corner Jean-Talon and Querbes, in Montreal, for their mortgage.

When an assets check was done, they were informed that there was still a substantial amount owing on their credit cards. THE LEGAL QUESTION AT ISSUE [ 22 ] There are two legal questions which the Court will have to answer in the present matter: has Farjana Begum satisfied her burden of proof to demonstrate that her MBNA credit card was stolen or lost? [ 23 ] If the answer to the first question is yes, could Farjana Begum claim (

i) moral damages; (ii) punitive damages; (iii) damages for trouble and inconvenience; (iv) payment of extra-judicial fees? [ 24 ] If the answer to the first question is no, of course, the Court will not have to answer the second question. But the Court will then have to address the question of the full responsibility of the Plaintiff for the three transactions in the context of the increasing of the limit of the variable credit without an express application of the Plaintiff. ANALYSIS 1.

The burden of proof [ 25 ] The regulation of credit cards in the province of Quebec is effected by the Consumer Protection Act [1] , which provides, in case of theft or loss of a credit card: 123. In case of loss or theft of a credit card, the consumer incurs no liability for a debt resulting from the use of such card by a third person after the issuer is notified of the loss or theft by telephone, telegraph, written notice or any other means. 124.

Even where such notice is not given, the liability of the consumer whose credit card is lost or stolen is limited to the sum of $50. [ 26 ] The jurisprudence is clear that where a cardholder seeks to be released of charges on their credit card (beyond the statutory minimum of $50), the burden of proof is on the cardholder to demonstrate, on the balance of probabilities, that her credit card was stolen or lost. See Kattous v. Amex Canada Inc. [2] See also Louis c. Banque Laurentienne du Canada [3] and El-Masri c.

Canadian Imperial Bank of Commerce [4] . [ 27 ] All the above cases concern facts that are analogous to the present situation: a cardholder brings proceedings against the issuer of the card for non-payment of charges which the cardholder claims are unauthorized charges on their card. [ 28 ] In all of the cases, the burden of proof is the same: it falls on the party that alleges that the charges are unauthorized to prove, on the balance of probabilities, that the charges were not authorized by the cardholder. [ 29 ] In the present case, the plaintiff has not discharged her burden.

The plaintiff has not offered any evidence, nor any explanation, that would tend to demonstrate how her card could have been used in Bangladesh without her knowledge or consent. [ 30 ] The plaintiff and her husband have limited themselves demonstrating that they were not present in Bangladesh and testimoning that the two recordings filed as Exhibits D-4 and D-6 are not theirs. [ 31 ] The defendant’s evidence shows that there are precise, grave and concordant presumptions that Farjana Begum knew, consented or at the very least acquiesced to the transactions which took place on her MBNA credit card at Emran Jewellers in Dhaka, Bangladesh. 2.

Farjana Begum’s conduct prior to the February 20 transactions [ 32 ] The sole use made by Ms. Begum of the MBNA credit card for the six (6) years prior to the February 20 transactions was to maintain a loan of $6,500 upon which she paid the minimum balance each month.

[ 33 ] The only exception was in December 2009, when she uses the MBNA credit card here to pay for a meal at Dera restaurant. [ 34 ] Less than a month before the February 20 transactions, Ms. Begum paid off the loan in its entirety, which has the effect of freeing up $6,500 in credit on her credit card. [ 35 ] This enables the person who used Ms. Begum’s credit card on February 20 to charge her credit card to the maximum, rather than be limited to less than $2,000 in credit. 3. The circumstances under which the MBNA credit card was used [ 36 ] Mr.

Boulianne testified that there are several ways in which a credit card may be used by a third party: o the credit card itself may be physically stolen; o an individual may obtain the information of the credit card without the physical card itself (i.e. telephone or internet transactions); o the credit card may be cloned, i.e. the magnetic stripe on the credit card may be copied mechanically and transferred to a blank piece of plastic. [ 37 ] In the present case, both Ms. Begum and Mr.

Hossain testified that the MBNA credit cards were not physically stolen and deposited the cards in Court (exhibit P-16). [ 38 ] The hypothesis that the information of the credit card was obtained without having access to the physical credit card must also be set aside as Mr. Bouliane testified that the cards were swiped in Bangladesh: i.e. the cards must have been physically there in order to be swiped. [ 39 ] To the extent that Ms. Begum and Mr. Hossain made any claims as to how the alleged theft occurred, they maintained that the MBNA credit card must have been cloned. [ 40 ] As Mr.

Boulianne explained, it is highly unlikely that the MBNA credit card was cloned in the present case. [ 41 ] Mr. Boulianne testified as to what occurs when a credit card is cloned: o The credit card is swiped and the magnetic information contained on the card is copied; o A new card is then created with this information and then used; o A special machine, which is not readily available is necessary both to steal the information contained in the magnetic stripe and to create a new card with the same information. [ 42 ] The facts in this case render it virtually impossible that the credit card was cloned: o Ms.

Begum’s credit card was only swiped once previously at the Dera restaurant; o Mr. Boulianne’s investigation has disclosed no other instances of cloning at the Dera restaurant; o Mr. Boulianne’s investigation has disclosed that none of the other cards with respect to which fraud was alleged were used at the Dera restaurant; o With particular respect to the MBNA credit card issued to Mr. Mollah, it never had been swiped prior to the date at which the alleged fraud took place. [ 43 ] The only possible conclusion is that Ms.

Begum’s MBNA credit card was not cloned at the Dera restaurant. [ 44 ] No other scenario concerning cloning is in any way plausible, even if there were any evidence to support such a scenario [5] : o Cloning Ms. Begum’s credit card outside of Dera restaurant would require the alleged cloner to remove Ms. Begum’s card from her wallet, clone it, and return it to her purse without her knowledge; o Since Mr. Hossain and Mr. Mollah equally claimed that they were subject to similar frauds, the alleged cloner would in addition have needed obtaining access to Mr. Hossain and Mr.

Mollah’s respective wallets, removed their cards from their wallets and returned them inside their wallets without their knowledge; o As testified by Mr. Boulianne, the equipment necessary to clone the cards was not readily available. [ 45 ] Moreover, since any such alleged cloning presumably happened in Montreal, it is a surprising coincidence that all uses of the allegedly cloned cards would have occurred in Bangladesh, the country of origin of Ms. Begum, Mr. Hossain and Mr.

Mollah. [ 46 ] In conclusion, once we have set aside as highly unlikely that the cards were stolen, that identity theft occurred or that the cards were cloned without Ms. Begum’s knowledge, the only possible conclusions are that: o the cards were given to a third party together with the necessary information to use them; o the cards were cloned with Ms. Begum’s knowledge.

4. The callers’ knowledge of personal information of Ms. Begum [ 47 ] The individuals who called MBNA on January 8 and February 20 knew considerable additional information about Ms. Begum: o her date of birth; o the credit card’s three-digit security number appearing on the back; o her home telephone number; o her mother’s maiden name; and o her husband's name and also a cardholder Anwar Hossain. [ 48 ] None of this information appeared on Ms.

Begum’s credit card and all of it was necessary to unblock the credit card to be used in a foreign country. [ 49 ] The individuals who called MBNA also likely knew the credit limit of Ms. Begum’s credit card, as the total amount of the transactions, $8,759.76 was very close to Ms. Begum’s credit limit of $8,400. 5. The identical frauds committed using the credit cards of Ms. Begum, Mr. Mollah and Mr. Hossain [ 50 ] Thus far, Mr. Boulianne had identified seven separate frauds involving the credit cards of Ms. Begum, Mr. Mollah and Mr. Hossain, occurring contemporaneously. o Ms. Begum’s MBNA credit card; o Ms.

Begum’s TD Canada Trust credit card; o Ms. Begum’s BMO credit card; o Mr. Mollah’s MBNA credit card; o Mr. Mollah’s BMO credit card; o Mr. Mollah’s RBC Royal Bank Visa credit card; o Mr. Hossain’s Desjardins credit card. [ 51 ] The fact that seven frauds, involving the same three parties took place at the same time in different stores, stretches credulity. 6. Ms. Begum, Mr. Mollah and Mr. Hossain’s conduct after the transactions [ 52 ] The conduct of Ms. Begum and Mr.

Hossain after the initial discovery of the fraud is also inconsistent with their claim that they had no knowledge of the fraud. [ 53 ] The first alleged unauthorized transactions occurred in January 2010, on Mr. Hossain’s Desjardins credit card and on Mr. Mollah’s RBC Royal Bank credit card. [ 54 ] Mr. Hossain, in particular, was advised on or about February 4, 2010 of the fraud on his card. [ 55 ] Yet despite this, neither Ms. Begum nor Mr.

Hossain took any steps to cancel their credits cards because they may have been compromised. [ 56 ] Note that if they had taken such steps, the alleged unauthorized transactions on Ms. Begum’s MBNA credit card would not have occurred, since they occurred on February 20, 2010. [ 57 ] Even after Ms. Begum discovered the unauthorized transactions on her MBNA credit card on February 21, bringing the compromised credit cards to three (3) (one of Ms. Begum’s, one of Mr. Hossain’s and one of Mr.

Mollah’s), still no effort was made to notify the issuers of other credit cards that unauthorized transactions have taken place. [ 58 ] As a matter of fact, as Mr. Hossain testified, he only allegedly found out about the fraud on Ms. Begum’s TD credit card when he and Ms. Begum went to the TD Bank for a completely different reason at the beginning of March 2010. [ 59 ] Mr. Hossain and Ms. Begum’s pretensions that they were surprised to find out that unauthorized transactions had taken place on their TD Bank credit card (see Mr.

Hossain's testimony and paragraph 4 of Exhibit D-8) does not seem true for people who on that date, were already aware that three of their other credit cards had unauthorized transactions on them. Amount due

[ 60 ] MBNA authorised three transactions for a total amount of $8,759.76 and the previous balance was $190.88. The total balance is now $8,950.64. [ 61 ] The credit limit was $8,400. and Ms. Begum never asked to increase it. [ 62 ]

Section 128 of the Consumer Protection Act says: Where the merchant has indicated to the consumer the amount up to which variable credit is extended to him, the merchant shall not increase such amount unless the consumer expressly applies therefore. [ 63 ] Consequently, MBNA should have limited the transaction to the credit line specifically authorised: $8,400. CONCLUSION [ 64 ] The burden of proof is on Ms.

Begum to prove to the Court that her card was lost and stolen: to meet her burden of proof, it is not sufficient for her to affirm that it is the case without giving any explanation of how the fraud took place and how the alleged fraudsters were able to obtain so much personal information about her. [ 65 ] For its part, MBNA has set out precise, grave and concordant elements that show that it is very unlikely that the card was cloned and that the fraudsters knew all the personal information about Ms. Begum and Mr. Hossain which would allow them to unblock the credit card. What is more, Ms. Begum and Mr.

Hossain’s conduct after the fraud was not consistent with that of individuals who have been defrauded: they have failed to notify their other credit cards issuers of the other frauds until after they occurred, and they didn’t volunteer any information they might have had concerning the identity of a prospective fraudster. FOR THOSE REASONS, THE COURT: DISMISSES the Plaintiff's suit; THE WHOLE with costs. __________________________________ CHRISTIAN M. TREMBLAY, J.C.Q. Me Peter R. Lack Attorney for Plaintiff Me Patrick Kergin Blake, Cassels & Graydon llp Date of hearing: November 16 and 17, 2011 /