This morning Jane Badger was acquitted of fraud at Birmingham Crown Court. The judge found there was no case to answer.

Her case was remarkably similar to that of John Munden, about whom I wrote here (and in my book here). Like John, she worked for the police; like John, she complained to a bank about some ATM debits on her bank statement that she did not recognise; like John, she was arrested and suspended from work; like John, she faced a bank (in her case, Egg) claiming that as its systems were secure, she must be trying to defraud them; and like John, she faced police expert evidence that was technically illiterate and just took the bank’s claims as gospel.

In her case, Egg said that the transactions must have been done with the card issued to her rather than using a card clone, and to back this up they produced a printout allocating a transaction code of 05 to each withdrawal, and a rubric stating that 05 meant “Integrated Circuit Card read – CVV data reliable” with in brackets the explanatory phrase “(chip read)”. This seemed strange. If the chip of an EMV card is read, the reader will verify the signature on the certificate; if its magnetic strip is read (perhaps because the chip is unserviceable) then the bank will check the CVV, which is there to prevent magnetic strip forgery. The question therefore was whether the dash in the above rubric meant “OR”, as the technology would suggest, or “AND” as the bank and the CPS hoped. The technology is explained in more detail in our recent submission to the Hunt Review of the Financial Services Ombudsman (see below). I therefore advised the defence to apply for the court to order Egg to produce the actual transaction logs and supporting material so that we could verify the transaction certificates, if any.

The prosecution folded and today Jane walked free. I hope she wins an absolute shipload of compensation from Egg!

I appeared on “You and Yours” (Radio 4) today at 12.35 with an official from the Financial Ombudsman Service, after I coauthored a FIPR submission to a review of the service which is currently being conducted by Lord Hunt.

Our submission looks at three cases in particular in which the ombudsman decided in favour of the banks and against bank customers over disputed ATM transactions. We found that the adjudicators employed by the ombudsman made numerous errors both of law and of technology, and concluded that their decisions were an affront to reason and to justice.

One of the cases has already appeared here on lightbluetouchpaper; the other two cardholders appeared on an investigation into card fraud on “Tonight with Trevor MacDonald”, and their case papers are included, with their permission, as appendices to our submission. These papers are damning, but the Hunt review’s staff declined to publish them on the somewhat surprising grounds that the information in them might be used to commit identity theft against the customers in question. Eventually they published our submission minus the two appendices of case papers. (If knowing someone’s residential address and the account number to a now-defunct bank account is enough for a criminal to steal money from you, then the regulatory failures afflicting the British banking system are even deeper than I thought.)

The Financial Ombudsman Service, and its predecessor the Banking Ombudsman, have for many years found against bank customers and in favour of the banks. In the early-to-mid 1990s, they upheld the banks’ outrageous claim that mag-stripe ATM cards were invulnerable to cloning; this led to the court cases described here and here. That position collapsed when ATM criminals started being sent to prison. Now we have another wave of ATM card cloning, which we’ve discussed several times: we’ve shown you a chip and PIN terminal playing Tetris and described relay attacks. There’s much more to come.

The radio program is online here (the piece starts 29 minutes and 40 seconds in). We clearly have them rattled; the ombudsman was patronising and abusive, and made a number of misleading statements. He also said that the “independent” Hunt review was commissioned by his board of directors. I hope it turns out to be a bit more independent than that. If it doesn’t, then consumer advocates should campaign for the FOS to be abolished and for customers to be empowered to take disputes to the courts, as we argue in section 31-32 of our submission.