Westpac v ASIC: replacement unsolicited debit cards permitted

In Westpac Banking Corporation v Australian Securities & Investments Commission [2009] FCA 1506 the Federal Court decided that by sending a Westpac Debit MasterCard card to 424,000 of its existing Handycard holders, Westpac had sent such cardholders the Debit MasterCard card in renewal or replacement of, or in substitution for, a card of the same kind previously sent to him or her, being the person’s Handycard, as permitted by section 12DL of the Australian Securities and Investments Commission Act 2001 (Cth).

ASIC is considering the judgment and will assess whether or not to appeal the decision.

Interestingly NAB recently agreed with ASIC to deactivate American Express credit cards sent unsolicited as ‘companion’ cards to NAB Qantas Gold account customers.

Westpac decided to substitute its Westpac Debit MasterCard for customers’ Handycards. The new card allows the customer to do what he or she did with their Handycard. However, the new card also has additional functions and can be used to access the customer’s account in different ways to those with a Handycard.

ASIC argued that these differences mean that the new card is not “a card of the same kind” as the Handycard and that Westpac had breached section 12DL. Over 424,000 Handycard holders had received the new card by late May 2009.

Judge Rares decided that:

The expression “of the same kind” does not require that the previous and later cards are absolutely identical…

Here, each of the Handycard and the new card (the debit MasterCard card) is a debit card within the meaning of s 12DL(5). Each card is intended for use by a person to obtain access to an account he or she (or the person who nominated him or her to receive the card) holds for the purpose of withdrawing cash or obtaining goods or services. A person who has received a new card from Westpac will be able to use it at least for all the purposes he or she used the earlier Handycard.

I am of opinion that the extra functionality permitting use by mail, telephone and on the internet and the wider range of places at which the new card may be used, whether considered individually or together, do not change or deny the nature of the new card as a debit card. The new card is, in the natural and ordinary meaning of s 12DL(2)(b), a card of the same kind as the Handycard. And, it offers contractual protection of the customer from misuse of the card by others of the same kind as the Handycard. This is because the terms of the product disclosure statements so provide.

There is no lessening of the protection of consumers intended by the Parliament provided by this construction. The Parliament sought to guard against them being sent a credit card or a debit that they had never sought. But, it was not the intention of the Act to constrain the relationship between an issuer of a card and its customer by preventing the issuer updating the particular kind of card (i.e. a credit or debit card) with the latest version of that kind of card. The more is this likely given the context in which s 12DL has taken its present form of a period of rapid technological growth and the continuing evolution of financial systems.

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