Man who created own credit card sues bank for not sticking to terms

[Hydrogen]

When Dmitry Argarkov was sent a letter offering him a credit card, he found the rates not to his liking.

But he didn't throw the contract away or shred it. Instead, the 42-year-old from Voronezh, Russia, scanned it into his computer, altered the terms and sent it back to Tinkoff Credit Systems.

Mr Argarkov's version of the contract contained a 0pc interest rate, no fees and no credit limit. Every time the bank failed to comply with the rules, he would fine them 3m rubles (£58,716). If Tinkoff tried to cancel the contract, it would have to pay him 6m rubles.

Tinkoff apparently failed to read the amendments, signed the contract and sent Mr Argakov a credit card.

"The Bank confirmed its agreement to the client's terms and sent him a credit card and a copy of the approved application form," his lawyer Dmitry Mikhalevich told Kommersant. "The opened credit line was unlimited. He could afford to buy an island somewhere in Malaysia, and the bank would have to pay for it by law."

However, Tinkoff attempted to close the account due to overdue payments. It sued Mr Argakov for 45,000 rubles for fees and charges that were not in his altered version of the contract.

Earlier this week a Russian judge ruled in Mr Argakov's favour. Tinkoff had signed the contract and was legally bound to it. Mr Argakov was only ordered to pay an outstanding balance of 19,000 rubles (£371).

"They signed the documents without looking. They said what usually their borrowers say in court: 'We have not read it',” said Mr Mikhalevich.

But now Mr Argakov has taken matters one step further. He is suing Tinkoff for 24m rubles for not honouring the contract and breaking the agreement.

Tinkoff has launched its own legal action, accusing Mr Argakov of fraud.

Oleg Tinkov, founder of the bank, tweeted: "Our lawyers think he is going to get not 24m, but really 4 years in prison for fraud. Now it's a matter of principle for @tcsbanktwitter."

The court will review Mr Argakov's case next month.

https://www.telegraph.co.uk/finance/personalfinance/borrowing/creditcards/10231556/Man-who-created-own-credit-card-sues-bank-for-not-sticking-to-terms.html

....

This news story could illustrate one advantage crypto currencies have over conventional banking and credit platforms in terms of them being less trust based. Smart contracts in crypto would likely be deliberately designed to prevent this form of exploit. While credit card companies as trust based systems would more commonly fail to recognize the attack vector.

Every so often I see stories in the news where a bank and consumer get into a legal dispute and the bank loses in impressive fashion. Years ago there was a guy who wore fake vampire teeth in news interview that sued wells fargo and won(news clip below):

https://www.youtube.com/watch?v=_oIxBVhGubI

Perhaps we will see less of this occurrence as financial institutions like banks make a transition to more algorithmically regulated banking which relies less on trust. Until then, I hope everyone enjoys humor and entertainment from this, while it lasts.

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[Ailmand]

Might be, blockchain technology can lessen such event since transactions thru the blockchain tech is not bound and written by parties who are doing transactions. This might be one of the reasons why satoshi created bitcoin for users to avoid other centralized financial institution from sucking the money out and out snarting their users.

[okala]

The blockchain smart contract took care of this long ago what the breach of trust with credit card which have result to this law suit can not happen in bitcoin and on the blockchain because there is no third party contract signing of documents in financial transactions done on the blockchain. The most problem we have in the traditional financial system is the centralized mode of operations which allow for third party involvement.

[1Referee]

The most problem we have in the traditional financial system is the centralized mode of operations which allow for third party involvement.

I didn't hear all that many people complain about intermediaries before Bitcoin existed.

I think the main aspect is that Bitcoin and the rest of crypto has forced financial institutions to offer a fairer service, and have more eye for their clients, which I have definitely seen take place. I don't think it's coincidence that my bank got so much more friendly and cheaper with their services after Bitcoin's invention.

Banks had free game, and now they have a robust competitor in the industry, and this competitor forces them to improve and offer better services at lower cost.

[Beerwizzard]

It seems to be a funny joke but nothing more. This guy probably just changed rates of the existing bank products, which would probably make the contract not valid because that bank does not provide those services. In other words if I want to buy a car and attempt to cheat and change the parameters of some shitty Renault then it doesn't mean that the factory have to produce a renault with an engine from a space shuttle.
Also we see that it is Russia and everything is possible there. Bank can easily sue him for fraud or something like that.

[jjjfff]

This is such an obvious fraud.

In my jurisdiction that would be considered a void contract. Contracts not done in full voluntary agreement by 2 parties, with hidden clauses, are void almost everywhere.

Getting people to sign unwanted clauses because of ignorance is so 1800's.

[LeGaulois]

He just took advantage of a system flaw, with the automation in the steps and others I am not surprised to read such a story.

Smart contracts have indeed their place but the thing is smart contracts are not only about cryptos. It can also be used (and it is) with the fiats system, insurance.. It's about IT protocols firstly. And to be an efficient smart contract the data needs to be accurate and this is where we have a limit with it.

[exstasie]

This news story could illustrate one advantage crypto currencies have over conventional banking and credit platforms in terms of them being less trust based. Smart contracts in crypto would likely be deliberately designed to prevent this form of exploit. While credit card companies as trust based systems would more commonly fail to recognize the attack vector.

Perhaps we will see less of this occurrence as financial institutions like banks make a transition to more algorithmically regulated banking which relies less on trust. Until then, I hope everyone enjoys humor and entertainment from this, while it lasts.

You don't need smart contracts to prevent this. Just don't accept customer amendments since these are boilerplate documents and if you do, actually read them.

Smart contracts are only needed for regulating value transfer. I could see smart contracts securing collateral with secured loans (although we'll probably see some big screwups from bad coding ) but it's not possible to do that with unsecured loans like credit cards. And it's tough to imagine a world without credit cards. I think at high enough interest rates and fees, issuing unsecured credit will always be justifiable as long as banks exist.

[Chikitita2004]

He just thought he's clever  .
Anything that is done with a wrong motive will be spoiled. Can't blame banks but I do hate them and the rules they impose. I wish we will be free from banks but there are no other services that can give as banks do. Cryptocurrency and its decentralization is the best but not all in life can be solved by crypto.

[Theb]

I don't know how Russian laws work or what the judges are thinking about this one but clearly Argarkov have submitted a falsified version of the original contract and even though their is a negligence on Tinkoff's part clearly the fake contract isn't enforceable therefore it's voidable. The deceit of altering the original contract alone should be enough to counter the charges, which I am currently wonder how Tinkoff has lost the case. It's either the judges are not thinking straight or their lawyers are stupid to let this man take advantage of them.

[Adriano2010]

This means also bank not read contract and they ask client to read it, bank not do what they say to their clients, this is their own fault and i wish banks to be more secured and read always email and documents and not treat them as good. The banks are on the wrong way.

[bitmover]

Maybe in future cryptocurrencies can create a new form of the banking system. Less centralized and more flexible, where initiatives like that one cannot be easily suppressed.

[BitHodler]

Maybe in future cryptocurrencies can create a new form of the banking system. Less centralized and more flexible, where initiatives like that one cannot be easily suppressed.

If you think the banking system will ever change for the better, then you're wishful thinking. If they haven't changed in the last few decades, they will not change in a fundamental way in the next decade or two.

Their fee structure is so profitable and dependent on how the system has been, that even a slight change is something we should forget about. The best thing we can expect is that they switch to blockchains, but still, they are the one that will benefit.

They can keep using the blockchain for years without us even knowing about it. It's not in their interest to make that kind of information public, because people will start asking questions, which they don't right now.

[nur rochid]

Maybe in future cryptocurrencies can create a new form of the banking system. Less centralized and more flexible, where initiatives like that one cannot be easily suppressed.

we hope that way, even though the realization may be the generation after us. at the moment I just hope that bitcoin can be legalized in most countries in the world, and even then it has increased our assets

[Kevin77]

I guess  it is a bad thing from both sides, we can't really say banks are frauds for making that type of money from stuff that doesn't cost anything but than say kudos to the man for beating the bank at their own game. If something is bad than its bad for everyone not just the banks.

I think he did beat the system in a way and than got away with it but I really instead of making the bank lose a lot of money (which they will take from other people in return) it should just teach them a lesson and fix their own contracts for credit cards. I would rather see millions of people benefit from this instead of just one man who outsmarted the bank. This version only helps argakov and it is temporary, its not going to sustain, but what I suggested could change the lives of many.

[magneto]

This news story could illustrate one advantage crypto currencies have over conventional banking and credit platforms in terms of them being less trust based. Smart contracts in crypto would likely be deliberately designed to prevent this form of exploit. While credit card companies as trust based systems would more commonly fail to recognize the attack vector.

Every so often I see stories in the news where a bank and consumer get into a legal dispute and the bank loses in impressive fashion. Years ago there was a guy who wore fake vampire teeth in news interview that sued wells fargo and won(news clip below):

https://www.youtube.com/watch?v=_oIxBVhGubI

Perhaps we will see less of this occurrence as financial institutions like banks make a transition to more algorithmically regulated banking which relies less on trust. Until then, I hope everyone enjoys humor and entertainment from this, while it lasts.

Certainly ironic considering that these fine print T&Cs are exactly what financial institutions use to sometimes take advantage of their customers.

I'm not exactly sure how suing this guy for fraud is going to turn out for the bank, especially considering that a previous ruling was already made in favour of the borrower. Though, I certainly don't think that the type of compensation the guy is asking for is going to be handed out either.

At the end of the day, as you say, an immutable ledger may be needed to eliminate this type of problem (even though it may not be widespread). Whenever you involve a human in a certain task, including verifying contracts etc., there are bound to be errors and potential exploits available.

[traderethereum]

Maybe in future cryptocurrencies can create a new form of the banking system. Less centralized and more flexible, where initiatives like that one cannot be easily suppressed.

If you think the banking system will ever change for the better, then you're wishful thinking. If they haven't changed in the last few decades, they will not change in a fundamental way in the next decade or two.

Yes, I think they will be hard to change their old habit since they use that for a long time ago.

The bank system is not easy to be changed because it's connected to the government. But we could hope that with the existing of cryptocurrency, it will help the banking system to integrate with the blockchain so the banking system will be better than before so they can change the traditional way to the new era.

[dothebeats]

In our books, this could easily fall as fraud, though I don't know much about the Russian law and whether this could fall under the favor of Mr. Argakov. or the bank. Altering the contracts in to one's favor without the consent of the other party involved is already something fishy, though in this case it should be reviewed by the banks and knowing that this has been a practice of theirs for the longest of time, Mr. Argakov just found a loophole to exploit and make something out of it. Should the banks read the document before signing it, they could have saved all the hassles and all the negative publicity, but it seems like their legal counsel is not doing their job properly for it to come to this. It's an odd and silly case, but it just shows a weakness banks have when it comes to dealing with things like this.

[exstasie]

In our books, this could easily fall as fraud, though I don't know much about the Russian law and whether this could fall under the favor of Mr. Argakov. or the bank. Altering the contracts in to one's favor without the consent of the other party involved is already something fishy, though in this case it should be reviewed by the banks and knowing that this has been a practice of theirs for the longest of time, Mr. Argakov just found a loophole to exploit and make something out of it.

I love seeing someone beat the system. If the underdog can play the game and win, I'm all for it.

I'm just so surprised there's banks that still do business in this archaic manner with paper documents and wet signatures. I have a bunch of credit cards. I've never had the opportunity to amend a credit card agreement. You apply, they send you a card with a boilerplate agreement, and if you don't agree to the terms you need to cancel the card. That's how any sensible bank should nip this problem in the bud.

[TheCoinGrabber]

I don't know whether to laugh or be pissed off. It's an obvious hax that will cost the bank money in the meantime unless they can sue back and win.

I'm just so surprised there's banks that still do business in this archaic manner with paper documents and wet signatures. I have a bunch of credit cards. I've never had the opportunity to amend a credit card agreement. You apply, they send you a card with a boilerplate agreement, and if you don't agree to the terms you need to cancel the card. That's how any sensible bank should nip this problem in the bud.

Same for me, they just sent a card, the only choice I got is to either use it or call them and tell that I don't want it. Obviously none of the terms is agreeable but I took em anyway since I need it to not have to bring cash with me.