2015 - 2016

Payment systems

Cheque

Mr A began corresponding online with Ms X, who claimed to live in Malaysia.  Mr A believed they were in a romantic relationship.  Ms X told him she was selling her Dubai house and needed money to pay sales taxes.  She asked Mr A if she could send him a cheque to deposit into his account and send her some of the money, and retain the rest for himself.  Ms X explained that she was unable to bank the cheque herself because she was living in a hotel and had no proof of residential address to give her bank. 

Mr A received a £30,000 cheque, and deposited it into his bank account.  The bank told him it would hold the money for 21 days.  On hearing this, Ms X told Mr A to apply for a loan for half of the amount.  He applied for a $10,000 personal loan, which the bank approved.  Mr A sent Ms X the money via Western Union.  The foreign cheque was dishonoured 10 days later, and the amount deducted from Mr A’s account, leaving a large debt.

He complained that the bank had not made it sufficiently clear the foreign cheque could be dishonoured, although he accepted he was advised verbally the bank would hold the cheque funds to confirm the payment’s validity.  We reviewed the terms and conditions given to Mr A when he deposited the cheque.  They stated that a 21-day hold would apply and that the cheque could still be dishonoured after the hold period ended.  The receipt Mr A signed also contained the same information. 

He also complained that the bank had not acted responsibly approving his personal loan application because he was relying on the cheque clearing to repay it. 

We reviewed the bank’s loan application assessment.  The bank had applied its standard loan affordability assessment process, taking into account Mr A’s income and expenses.  The foreign cheque wasn’t taken into account in this assessment and we were satisfied that the personal loan was affordable given Mr A’s financial situation. 

While it was unfortunate Mr A had been scammed, we were unable to say the bank was responsible for Mr A’s losses. 

We have more information in our Quick Guide on Common scams targeting bank customers.