Bank Issues Credit Card to Cat

This was on Cnn.com yesterday:

SYDNEY, Australia (Reuters) -- An Australian bank has apologized for issuing a
credit card to a cat after its owner decided to test the bank's identity security system.

The Bank of Queensland issued a credit card to Messiah the cat when his owner Katherine Campbell applied for a secondary card on her account under its name.

"I just couldn't believe it. People need to be aware of this and banks need to have better security," Campbell told local media on Thursday.

The bank said the cat's card had been canceled. "We apologize as this should not have happened," it said in a statement.

As a former banking attorney (who used to draft and review bank forms, including credit card applications), the cat owner obviously lied on the application form. As the primary holder of the credit card (and whose identity and existence I am certain the bank rigorously checked) it was up to her to nominate the secondary holder. It's like deciding how to spend your money. The level of diligence required from the bank in verifying the existence and/or identity of the secondary holder is much less than when it initially issues the card.

She could have indicated Santa Claus as a secondary holder. The bank would not (and should not) care. The primary holder pays the bills, and by applying for a secondary card, authorizes the bank to charge her for expenses made by the secondary holder, even if the expenses are made by Santa. It really is none of the bank's business. KYC (know your customer) standards cannot extend to secondary card holders.

Now why am I getting riled up over a cat getting a credit card?

What's bothersome is that people will read this story and automatically assume the bank was at fault. This will cost the bank bad PR and additional administrative and legal expenses. Lawyers and consultants will be hired to find out what the problem is and how to fix it. But I maintain there is no problem. The bank was not at fault. Katherine Campbell asked for a credit card for her cat (which she nominated as a secondary holder) and she got it. How can that be a lapse of security?

It's excellent customer service if you ask me.