Bank not responsible for retiree’s scam losses

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Bank not responsible for retiree’s scam losses

Categories:

Fraud & scams,

Summary:

Daisy, who lived alone in a retirement village, received a phone call from a scammer who said he was from her telecommunications provider and that criminals had tried to hack into her computer. He told Daisy that the government needed her help to catch these criminals and convinced Daisy to download remote-access software on to her computer and to give him personal and banking information. The scammer initiated a request for internet banking and Daisy phoned the bank to complete the set-up.

Published:

November 2020

The next day, following the scammer’s instructions, Daisy went to her local branch, withdrew $3,500 and sent it overseas via a money remittance service. The scammer had told Daisy the government would refund the money. The scammer logged into her internet banking and made a payment of $12,500 to an overseas bank account.

When Daisy returned home, she found her computer on and her bank balance showed money had been withdrawn. When the scammer called and Daisy protested about the $12,500 withdrawal, the scammer repeated that the government would refund the money, adding that, if the bank called to check on the transaction, she should say she had approved it. By now, Daisy knew she had been scammed, but she was afraid that if she didn’t comply with the scammer’s request, they may retaliate, as they knew her address and personal information and that she lived alone. When the bank rang to check if the transaction should proceed, Daisy confirmed it should and the transaction was processed.

Daisy later rang the bank to explain what had happened and to ask it to retrieve her money. However, the bank found the funds were gone. The bank explained that it was not responsible for her loss because she had approved the payment when it queried her. It offered a $250 goodwill payment but she was not satisfied and asked us to investigate.

Our investigation

We considered Daisy had authorised the $3,500 cash withdrawal because she had made it in person and in accordance with the account mandate. We also considered she had authorised the $12,500 internet banking transaction because, although not initiating it, she did confirm it should be processed when the bank rang.

Daisy argued she should not be responsible for the $12,500 withdrawal because she had been afraid and felt under duress when the bank called for confirmation of the transfer. However, the fact a person authorises a transaction while under duress has no relevance unless a bank is aware of the duress. Daisy accepted the bank was unaware of this fact.