Some Butterfield Bank customers who have inadvertently been charged foreign transaction fees on purchases made with newly issued debit cards will be reimbursed for the additional charges, bank officials said Friday.
Butterfield Marketing Manager Rory Mann said the issue affected Butterfield debit MasterCard customers who made Cayman Islands dollar purchases at “a few” local businesses. The issue had not occurred with customers who were still using the old Visa debit cards, but those cards are all due to expire within the next few months.
The old Visa cards will begin expiring as early as Sept. 4, as long as the new bank cards have been activated. All Visa debit cards will expire by the end of October.
The problem arose with recent debit card purchases that were settled up in U.S. dollar amounts, resulting in foreign exchange fees being charged to the transaction, Mr. Mann said. Local businesses using point-of-sale terminals that were issued by banks other than Butterfield levied the fees inadvertently, he said.
Mr. Mann said Butterfield was working with the other local banks to resolve the foreign exchange fee situation “as quickly as possible.”
“Customers who have been impacted will receive refunds of any foreign exchange fees or surcharges applied to local transactions that have settled in U.S. dollars,” he said.
Customers were asked to call 345-815-7527 to claim back those added fees. The bank will require the original merchant receipts for the CI dollar purchase as well as the customer’s account number.
In an interview with the Cayman Compass last week, Mr. Mann indicated that additional staff had been brought in to field calls from customers during the change-over from Visa debit cards to MasterCard debit cards.
The switch to MasterCard is being made to facilitate the adoption of “chip and PIN” technology for debit cards. The chip and PIN cards are considered to be a more secure technology, assisting in the prevention of credit and debit card number “skimming” by thieves, who often scan the stolen card numbers onto other devices and empty the unsuspecting victim’s bank account.
Last year, Butterfield Bank became the first local retail bank in Cayman to convert its credit cards to a chip and PIN system.
Local prosecutors said last month that the Cayman Islands is being targeted by foreign criminals who come to the islands as tourists, but who intend to defraud the financial system via these bank card scams.
“This island has been targeted specifically,” Crown Counsel Toyin Salako said. “These people are specifically coming to the island to do that. They’re not coming here on holiday.”
Ms. Salako was speaking during the sentencing hearing for two Canadian nationals, Adam Mokdad and Hakim Benamara, who have pleaded guilty to conspiracy to defraud retail banks in the islands by using “cloned” credit cards to attempt to withdraw cash.
In this case, the most recent of several similar instances since 2013, the two men tried to withdraw cash from ATMs on Jan. 31 and Feb. 1.
The suspicious cards, which turned out to be gift cards with stolen credit card information placed on them, were retained by the bank’s teller machines. Police found the two men at a local hotel where a quantity of Starbucks gift cards and a credit card reader were recovered.
“This island specifically is quite vulnerable … because the ATM machines are not updated,” Ms. Salako said.
Bank officials said an embedded microchip in the new cards, used together with a security code, will make the withdrawals more secure by validating both the card and the cardholder electronically. The system would also prevent the use of gift cards, which would not be recognized as the user’s.
***Editor’s note: This story has been updated from the original.***