A leading year 2000 lawyer has set up an action group to bring a
legal test case against HSBC after the millennium bug disabled
thousands of bank credit card swipe machines during the busy
Christmas period.
Graham Ross, vice chairman of the Y2K Lawyers Association, and
principal of Cheshire law firm Ross & Co, is threatening to sue
the bank unless it agrees a voluntary compensation scheme for
thousands of small retailers hit by the problem.
Shoppers were left unable to pay for their goods when a
programming error disabled 14,000 Racal credit card swipe machines,
supplied to retailers by HSBC, on 27 December. Six thousand Racal
machines supplied by other banks were also hit.
Ross has written to the bank urging it to set up a voluntary
compensation scheme for retailers that lost business, wasted
management time, or had to pay bank charges because credit card
transactions were not processed in time.
"The losses suffered are an order of magnitude greater than
people realise," said Ross. "We want to avoid the bank getting into
quick low-cost settlements with their customers. If a third party
loses them money, it is right that the money is repaid."
The problem struck swipe-card machines supplied to the bank by
Racal. According to HSBC, the machines contained a programme that
looked ahead four days. The system wrongly interpreted dates in
January 2000 as January 1900.
HSBC said that it had not paid out any compensation to retailers
but said it would take the matter up with Racal if any customers
had lost money.
"We are talking about small retailers. I don't suppose they had
long queues of customers waiting to pay by credit card. That is not
to say that we don't take the matter seriously. But we have not had
a significant customer reaction," the company said.
Ross claimed that the incident could highlight poor contingency
planning by Racal and HSBC. Racal had failed to notify retailers of
a special code they could type in to their card readers to override
the problem in advance. And HSBC appears to have failed to test the
card readers over the critical dates, he said.
Racal said that it did not know how the problem had been missed.
The company pointed out that only 2% of UK retailers had been
affected by the problem.