Online bank issued faulty cards

Online bank Cahoot, which suffered a computer failure within minutes of its launch in June, has admitting issuing faulty debit cards.

Cahoot is sending out a new set of debit cards, after finding customers were unable to use their original cards to get cash back at supermarkets.

Cahoot blamed the glitch, which the bank knew about when issuing the cards, on Visa, which supplied them.

"We thought it best to issue the cards anyway, but replace them within a couple of months," a spokesman for Cahoot said. "We sent out letters and e-mails to make sure customers were aware."

The bank, owned by Abbey National, did not expect the problem to affect its drive to attract 150,000 customers within its first year of operation.

"No complaints"

"We have not had any complaints," the spokesman said. "I would be very disappointed if this became a major issue."

Issuing of replacement cards will continue throughout September.

Cahoot, which currently claims more than 30,000 customers, suffered its first glitch 90 minutes after launching, when its web site crashed.

The online banking sector suffered a further setback last week when market leader Egg, with more than one million customers, admitted it had been raided by fraudsters.

Cahoot, which operates around a core of just 56 staff, hopes by 2003 to have 5% of the online banking market, with 300,000 customers and 630,000 accounts.