Bank Hapoalim to Pay NIS 10 Million in Class Action Over Cash Deposits

Two Bank Hapoalim employees stole NIS 130,000 in cash from customers over several months by hiding the money in their clothing. The bills had been deposited by a cafe. This week, after the bank had long rejected the complaints, a settlement agreement was signed and submitted to the District Court in a class action, under which Hapoalim will pay NIS 10 million to the class action fund. Legal fees are expected to amount to NIS 2.25 million.

Cafe Netanel and its owner, Itamar Sharabi, claimed that over four months they deposited cash on different occasions and at different branches of Bank Hapoalim, and in every case the amount listed on the deposited bag differed from the amount actually deposited. They said the bank did not correct the “mistake,” and a bank representative even told them, “In my experience, in these cases the customer is always wrong.” Only after the matter reached court did the bank conduct a comprehensive review, which found that a “limited embezzlement” of NIS 130,000 had indeed been carried out by two bank employees.

The request to approve the class action concerned a cash deposit service for business owners. According to the petitioners, the self-service cash deposit service is handled negligently by the bank, causing harm to customers and allowing the bank to profit improperly. In doing so, they argued, the bank breaches its duty of trust toward its customers and its obligation to perform the contract in good faith. The bank, for its part, argued that the service is carried out according to a structured procedure that includes a series of built-in controls and is closely supervised to ensure proper operation.

Regarding the first deposit, the bank said it credited the cafe with the deposited amount, while the cafe erred in recording the sum by confusing NIS 200 notes with NIS 50 notes. The bank also explained that, according to the agreement signed by customers, they accept that the bank’s count is binding on both sides in cases of cash-bag deposits.

In the settlement agreement submitted to the court, and which is currently awaiting the response of the attorney general before approval, Bank Hapoalim stated that following the petitioners’ complaint about the deposits, it conducted a comprehensive review and found an unusual finding, namely that the gaps between the deposit amounts and the account credits were due to embezzlement carried out by two employees in the cash center, who took cash from deposit bags that had been counted. The bank also found, based on a review of security footage in its possession, that it was a “small-scale” embezzlement, one employee took NIS 115,000 and the other NIS 15,000. According to the bank, this involved the “physical taking of bills, while hiding them in items of clothing.”

After the review was completed, the bank fully reimbursed the embezzled funds that were found, plus interest, retroactively to the cafe. At the same time, complaints were filed with the police against the employees after they were fired. One employee was convicted, based on her confession, of embezzlement she carried out over two years, totaling tens of thousands of shekels, and was sentenced to community service. No indictment was filed against the second employee because of the amount involved.

As part of the proceedings, the parties went to mediation led by retired Judge Hila Gerstel, during which CPA Yehoshua Hazenfratz of the RSM Schiff-Hazenfratz firm was appointed, and an expert opinion was submitted to examine the causes of the process, among other things in order to identify any overall failures in the mechanism.

The expert opinion’s conclusions indicate that there are no “findings that can indicate that the alleged discrepancies caused damage,” and that “we found no evidence of damage caused by the bank to its customers beyond the findings that emerged from the internal review.” The petitioners were represented by attorneys Pinchas Michael Or and Guy Reshef.

Bank Hapoalim said in response: “During 2020, an embezzlement totaling NIS 130,000 was identified in the bank’s cash center. Following the findings, a comprehensive review was conducted by an external expert, which showed that there is no indication of damage caused to customers beyond this amount. All customers in whose accounts the embezzlement was identified received full compensation. The bank conducted a comprehensive lesson-learning process to prevent a similar case from recurring in the future.

“As part of the settlement, the bank intends to donate the settlement amount as a public benefit, in accordance with the published notice and the full provisions of the settlement agreement, especially in light of the fact that as of today there is no known customer who suffered any financial damage as a result of the incident.” The report was first published on the Globes website.