How one man's life was ruined after asking uncomfortable questions of FNB

Durban-based Nav Chan started questioning FNB's eBucks rewards calculations. They just didn't make sense. Weeks later his accounts were cancelled and he found himself listed on a secretive banking database operated by SA Fraud Prevention Services. Suddenly, his access to credit dried up, his business tanked and his financial reputation was in ruins. This is what happens when you get on the wrong side of the banks.    

South Africans familiar with the Edward Snowden revelations of mass snooping by the US National Security Agency might think that secretive collection of data is something that happens “over there.”

Think again. As Durban-based Nav Chan discovered in 2013, the SA Fraud Prevention Services (SAFPS) operates an anti-fraud database called Shamwari (Shona for “friend”) and his name was on it.

How his name ended up here remains a mystery. All it apparently took to be listed on the Shamwari database was an unsubstantiated "suspicion" that he was involved in fraudulent activities. No charge, no conviction, just a suspicion.

These are pretty serious accusations to make against anyone. Chan had a perfectly clean credit record – so much so that his bank, FNB, along with its partners Kulula and Discovery, showered him with monthly credit facilities of R250,000. So it naturally came as a shock when he found out that he was a suspected fraudster. 

He obviously wanted to know how he got onto the database. When he demanded to know from SAFPS what fraud he was suspected of, he got….silence. He asked whether these suspicions had been reported to the police and if so, what was the case number? Again, silence. In fact, he urged the bank to report the matter to the police. He checked whether legally-registered credit bureaus such as TransUnion and Experian had similarly listed him as a suspected fraudster. No, they had not.

So what is this secretive SAFPS database? Its contents are available to members only (the banks and retailers for the most part), unlike other credit bureaus such as TransUnion and Experian, which operate under the National Credit Act. If you believe you have been falsely listed as a bad credit risk at TransUnion or Experian, you have the right to challenge this information and have it removed. This happens frequently – judgments are mislabelled, wrong names and ID numbers are recorded, late payments are incorrectly reflected, and so on. But once you are on the Shamwari database, you remain there for 10 years and you may never know about it. Unless, that is, you start applying for credit. Even then, you may never know the source of your secretive blacklisting.  
 

All it apparently took to be listed on the Shamwari database was an unsubstantiated "suspicion" that he was involved in fraudulent activities. No charge, no conviction, just a suspicion.

The NCR instructed the SAFPS to cease operating what amounted to an illegal database, and the SAFPS decided to take it on appeal at the National Consumer Tribunal. Astonishingly, the Tribunal declared that the SAFPS did not have to register as a credit bureau, at which point the NCR took the matter to the North Gauteng High Court in June 2011. The NCR won the case in the High Court, which found the SAFPS had contravened section 43 of the NCA relating to the registration of credit bureaus. SAFPS was given 21 days to comply with the law and register as a credit bureau, which it has now done.

The good news is that the National Credit Regulator has now instructed FNB and Absa to remove Chan from the SAFPS database, a process that took nearly two years. Many people have been ruined in far less time.

How he got onto this database is the most mysterious part of the story. It all seems to have started when he had the temerity to question how FNB was calculating its eBucks rewards. When Chan looked at his eBucks statement each month, it just didn’t add up.

He suspected something fishy was going on. Was there someone at FNB who had a personal grudge against him and decided to maliciously list him on the database? 

Suddenly and inexplicably, in the second week of November 2012, his FNB Platinum card started acting up. Transactions would fail and he was unable to complete online orders. “There was also an issue with my eBucks and apparently my accounts were flagged. I suspected an internal error and the Platinum banker in charge indicated she would refer it to the Core Banking Solutions team and get back to me,” he says.

Then on 16 November 2012 FNB sent him a letter cancelling all his accounts on the grounds that he was a suspected fraudster.

WTF?

Suddenly, the penny dropped. “FNB wanted to get rid of me as a client because I was asking inconvenient questions,” he says. “Then they invented this suspicion of fraud.”

Though born in SA, Chan spent much of his life in the US and has a Masters degree from Chicago University. He is accustomed to US standards of consumer rights and was understandably shocked that he could be shafted so thoroughly by an unaccountable banking cabal, notwithstanding the supposed consumer rights enshrined in the National Credit Act. 

His questioning of how FNB was calculating his eBucks, he believes, got him a big, fat black mark with the bank and a listing on the SAFPS database. Once listed on this secretive database, you are effectively banished from the credit universe.  This amounts to financial defamation, says Chan, with horrific consequences for those listed on the basis of spurious or false information. Chan reckons this listing cost him millions of rands in lost business, reputation and time, and certainly opens the bank to a possible claim of damages.

On its website SA Fraud Prevention Services (SAFPS) boasts of being a proudly South African company “combating fraud across the financial services industry by providing a shared database to member organisations and offering the South African public a means of protecting themselves against impersonation and identity theft. SAFPS has successfully prevented more than R7 billion in attempted frauds since inception,” though these figures – to the best of our knowledge – have not been subject to an independent audit and should be treated with suspicion.
 

FNB wanted to get rid of me as a client because I was asking inconvenient questions,” he says. “Then they invented this suspicion of fraud.”

SAFPS was an initiative of Business Against Crime South Africa, but at its core is the Shamwari database listing suspected fraudsters. Access to this database is a members-only affair. It operated, in effect, as a “secret Credit Bureau which for years operated outside the legal framework as stipulated by the National Credit Act,” according to a rather excellent investigative piece by Uspiked.com.

The members of SAFPS include all the major banks and retailers. Its directors include representatives of the four major banks, plus African Bank, now under curatorship and being investigated for possible fraud. One wonders if any African Bank executives found to have committed fraud in the bank will end up on the Shamwari dastabase. Our guess is that they will not. In fact, we have prima facie evidence of several bankers committing fraud that we would suggest be listed on this database. Again, we doubt this will ever happen, but perhaps readers should ask whether African Bank executives now under investigation for possible fraud will be listed on this database. Address your questions to SAFPS’s Carol McLoughlin ([email protected]).

More than 3,000 people are listed on the database

There are more than 3,000 people currently listed on Shamwari. Chan only found out about the listing when his bar-coded green ID book was stolen in 2013 and he tried to notify SAFPS to prevent anyone using his ID. He was then informed that SAFPS could not register his stolen ID as he was listed as a suspected fraudster by both FNB and Absa. Absa as well? FNB seems to have passed on its alarming and unsubstantiated suspicions to at least one other bank. And that is perhaps the most alarming part of this story. 

Another bizarre twist to the tale: on 16 November 2012 Chan was notified by way of an emailed letter that his FNB account had been cancelled, but the bank addressed the letter to an unknown location in Kew, Gauteng – an address that Chan knew nothing about. He had never lived in Kew. He was a client of FNB’s Florida Road branch in Durban, and was well known to the staff there.  What does this say about FNB’s Financial Intelligence Centre Act (FICA) practices when they cannot get his address right? In fact, what does this say about anything the bank says in this matter, particularly the accusations of fraud?

Chan fired off a letter to the bank asking how a Durban-based banker could be overseeing a client in Gauteng. The bank replied that this was the address given on his profile. Then on 23 November 2012 he received an official “Termination of Banking Relationship” letter from FNB, with his address now correctly reflected as Durban.

Roughly a week later he received credit card termination letters from FNB, Kulula and Discovery. The FNB letter was signed by Johan Maree, the CEO, alleging that Chan had applied for an increase on his FNB Platinum card on the basis of “inconsistent information contained in the bank statements and salary advises (sic) provided and allege that the documents supplied were fraudulent. In light of this you misrepresented to the bank your affordability and the issue of your credit card and any subsequent limit increase was issued incorrectly, based solely on fraudulent documentation supplied to the bank.”

The bank also reserved its right to press criminal charges of fraud against Chan.

Says Chan: “This was completely false. They said the payslips I submitted were false, which is untrue. My employment was valid and so were the figures (on the payslip).”

Chan was shocked to receive almost identically worded termination letters from Kulula and Discovery. Uspiked did a little bit of detective work and found out that the metadata on all three emailed cancellation of facilities letters were the same. This means all three letters came from the same workstation. Probably from the same individual.

The fact that the NCR has instructed Absa and FNB to remove Chan’s name from the Shamwari database suggests it could find no wrongdoing on his part. In theory, Chan should be reinstated as a private banking client of FNB along with his previous credit facilities, though Chan says he wants nothing more to do with a bank that financially defamed him and caused him millions of rands in lost business.

The SAFPS was recently registered as a credit bureau. But as Uspiked points out, section 43 of the NCA specifically prohibits banks from having a controlling interest in credit bureaus. Perhaps it’s time for South Africans to start demanding information from SAFPS, and the NCR, and start checking what information is actually on this database. It is well known, says Chan, that several banking customers have been denied credit as a result of secretive information listed on Shamwari. “It’s not just denial of credit,” says Chan. “Being listed on this database can ruin one’s reputation and prevent you doing business with major corporations.”

In Chan’s case, his blacklisting cost him plenty.  Business associates started to look at him askance, his access to credit evaporated, he was unable to fund export consignments and his business took a dive. Chan was born in SA but left to study in the US and, at the behest of his parents, returned to the country of his birth some years ago. He started up an import-export business and was successful enough to be listed as a private banking client.

“I’m in the wholesale fuel business and cash flow is important to engage with deliveries to customers. In the old days we had credit with the oil companies but now we must tender cash for every purchase so with the shutdown of my account at FNB, everything literally dried up overnight. How I’ve survived so far is a complete miracle of tenacity.”

The lesson here is pretty clear: if you piss off your bank, never mind that you have a perfectly clean credit record, you may end up on its secret blacklist and your life is ruined.