Whether it’s buying a lotto ticket, placing a bet on the horses or playing the pokies, most people gamble at some point in their lives. But even so, it’s important to know how gambling works and to be able to differentiate between responsible and irresponsible gambling. Responsible gambling means understanding the odds, and knowing how much time or money to spend and when to stop. Regular and irresponsible gambling however, can be extremely addictive, dangerous for your bank account, and even your life. Alarmingly, it appears that increasing numbers of gamblers are turning to credit facilities to fund their habit. Recent news reported that credit agencies aren’t helping the Australian gambling problem either. In fact, they could actually be helping to make the gambling on credit problem worse.
Commonwealth Bank offered credit card increases to a problem gambler
Perhaps one of the most alarming news stories of late; The Commonwealth Bank (CBA) recently admitted to offering repeated credit card limit increases to a customer who was begging them to stop, because he had a gambling addiction and a $30,000 debt.
David Harris, a qualified roof tiler, broke down in tears at the financial service’s Royal Commission when he described his experience with CBA and his fruitless attempts to get help. He told the commissioner, Kenneth Hayne, that he had started gambling seriously with his first CBA credit card in 2015, and within a year he had obtained two more credit cards with CBA as his losses increased. His first card had a $10,000 limit, his second a $7,000 limit, and his third a $8,000 limit.
Roughly a month after he opened the third account, he said, CBA had sent a letter to his house offering to increase the limit on his first card from $10,000 to $12,100, which he accepted. It took his aggregate credit limit to $27,100.
In October 2016, during another phone call, he was told he was eligible for another credit increase, which he refused. “I explained I’m a gambler, I have a gambling problem, they can clearly see that I’ve got a gambling problem because of the transactions I’ve been making, and I don’t understand why they keep offering me more money.” he said.
Mr Harris received a letter 10 days later offering him a credit increase from $27,100 to $32,000. Four weeks later, another letter offered to increase the limit to $35,000.
Clive van Horen, Commonwealth Bank’s executive general manager of retail products, apologised to Harris for the experience and admitted to the commission that CBA needed to improve its credit card lending practices.
“We’ve acknowledged that we should not have provided that final credit limit increase offer.” Van Horen said.
He stated that when Harris had told a CBA staff member on the phone that he had a gambling problem the information was not passed through. “That’s a failing and we acknowledge that and we’ve got to find ways to address that.” he said.
In April last year, CBA changed its practices so it no longer offers credit card limit increases to customers who are spending large amounts of credit on gambling activity. Since December, it had also been monitoring the use of debit accounts for gambling activity, because problem gamblers will often shift funds between credit and debit accounts.
An ethical responsibility to vulnerable customers
As of February 17, federal legislation banning gambling companies from giving credit to people will come into effect. However, the laws do not extend to banks, which can still provide credit to gamblers via credit cards, overdrafts and personal loans – Pretty ridiculous, right? Although, in Financial Counselling Australia’s (FCA) submission to The Royal Commission, the lending practices of the bank when it comes to gamblers, has been put under the microscope.
“My personal opinion is that gambling on credit cards should not be possible. In my role here at Life After Debt, I see a growing rate of Insolvencies which can be attributed to gambling and other addictions. With credit cards being so readily accessible, I feel they should not be allowed as the funding source for these websites and app-based gambling sites, as there is no duty of care exercised in the remote application.” – Penny May, Associate Director, Life After Debt.
Gambling Addiction help is available
Whilst banks and credit agencies may not be helping, many organisations are doing so by offering support, assistance and counselling for people with gambling problems. Depending on the service, the aim is to either control the gambling or abstain altogether. Some organisations also offer support to affected family and friends.
Just some of the helpful organisations:
If gambling addiction has taken a toll on your finances, increased your debt, you’re having difficulty paying off your debt, or can’t seem to get a loan, we can help. At Life After Debt ®, we have offices in Perth and Sydney, and can help you reduce your debt and avoid bankruptcy with affordable, practical financial solutions, proven to relieve hardship.
We provide honest and sympathetic, without judgement, advice. Contact us today.