Customer warned of binary trading risks

Common scams targeting bank customers,
Eleanor opened an online account with an overseas binary trader. She deposited funds into the account by bank transfer at her local branch. She told the banker about the trading opportunity and the banker warned that it could be a scam. Eleanor reassured the bank that she was certain it wasn’t. She made a few modestly successful trades then the trader asked her to increase her deposit to $US50,000. Eleanor was suspicious of this request so emailed her bank asking whether it was aware of any trading scams of this type in New Zealand. The bank never responded to her email.
July 2019

She transferred a further $US40,000 to the trading account. The bank noticed the transfers and called Eleanor to check the legitimacy of the transfers. Once more, Eleanor assured the bank she wanted the payments made and understood the risks involved. Unfortunately, Eleanor lost most of the money in bad trades.

Eleanor complained that the bank should have been aware it was a scam operation, and also should have responded to her email. Had it done so, she wouldn’t have transferred the further $US40,000. Based on this, Eleanor requested compensation from her bank.

The bank declined because it had verbally warned her about binary trading during the time she had been sending the trader money. The bank said Eleanor should have first looked into the risks of dealing with binary traders. As such, the bank considered it was not responsible for her losses, but it offered her $NZ1,000 in recognition of their longstanding relationship.

Our investigation

The bank should have responded to her email, but it had warned Eleanor verbally – both before and after she sent the email – about the risk of binary traders. Furthermore, Eleanor said in her email that she did not intend to send further funds to the trader until she received a response from the bank. However, within a day of sending that email, Eleanor transferred $US10,000 to the trader and later contacted the bank to arrange international money transfers to the trader. It therefore didn’t seem that Eleanor was relying on the bank’s email response before sending funds.

Based on these findings, we could not see that the bank was responsible for Eleanor’s loss.


Eleanor accepted the bank’s offer of $1,000.

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