Romance scam victim determined to transfer funds despite bank’s warnings

Categories:
Common scams targeting bank customers
Summary:
Vern transferred $60,000 overseas over two months in a romance scam. Then he sent another $11,000 in cash advances from his credit card to the fraudster.
Published:
November 2021

The bank called him when he sent the first international money transfer of $20,000, to check whether the recipient was a company or an individual.  Vern said he believed the recipient was an individual. The staff member said the bank would need the recipient’s surname for the transfer to proceed, and also asked for more details about the transfer. Vern said the funds were for his girlfriend’s business. His girlfriend was in Asia, so the funds had to go via Central America. The staff member discussed the potential for fraud. Vern said he had considered this, but wished to continue. He said he would call back with the surname. He rang back the international team and was referred to the fraud team. A member of that team also raised the possibility of fraud, but Vern said he wished to press on, and so the bank made the transfer.

Several days later, Vern set up another international money transfer, this time for $26,000. The bank stopped it and also blocked his ability to make overseas transfers. Vern then made an internet banking transfer of $26,000 to his account with another bank in New Zealand. He lodged a complaint against the bank for interfering with his banking. The bank refused to reinstate his ability to make overseas transfers. 

About this time, he made a transfer of $26,000 to Central America through his other bank. This bank raised concerns and Vern’s family lodged a fraud complaint with police. Despite lodging a complaint, Vern remained infatuated with the fraudster and made three cash withdrawals totalling $14,000 at branches, deposited the money in another person’s account with another bank, and arranged for the funds to be transferred from there to the fraudster.

Vern’s son rang the bank and said his father was still caught up in a romance scam. The bank made a note on its records, but took no other action. Vern then made cash advances of $11,000 on his credit card, and sent all this money to the fraudster. 

Vern’s son made a complaint with the bank and then with us. 

Our investigation

Vern’s son said the bank should have stopped the first transfer of $20,000, particularly since it had required a surname to complete the transfer. The bank said it asked about the recipient’s name in order to elicit more information about the transfer because it suspected fraud. From the bank’s diary notes and phone calls, we were satisfied the bank clearly conveyed its concerns that he might be caught up in a scam, and also that it explained the consequences of continuing with the transfer. Vern’s subsequent complaint to the bank confirmed he understood the risks because his letter said the bank had advised him he would have no comeback against it if he sent off the money in spite of its concerns. 

Vern’s son also complained the bank should have stopped his father’s transfer of $26,000 to the other bank. However, banks are not obliged to monitor customer’s accounts for this type of activity. In any event, it was more than likely Vern would not have heeded further warnings. Vern continued to trust the fraudster despite the bank’s warning and its blocking of his ability to transfer money overseas, and despite the police complaint, the family’s involvement, and the other bank’s warning.

However, we considered the son’s phone call to tell the bank Vern was still involved in a romance scam should have prompted the bank to review his accounts for any transactions that did not fit his usual pattern of banking. Had it done so, it would have seen the three large cash withdrawals. This was sufficiently unusual to warrant another warning. Although the bank could not have refused to allow him to withdraw his own funds, it might have been able to prevent the cash advances on his credit card. The bank acknowledged this and offered to refund the $11,000 in cash advances. 

Outcome

We did not uphold the son’s complaint that the bank was liable for all of Vern’s losses. Vern accepted the $11,000 offer.

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