Bank not responsible for payments made to scammer

Categories:
Common scams targeting bank customers
Summary:
Carolyn lost $23,000 in a romance scam. She made a series of payments to the scammer in the course of a month, discovering she had been deceived only after she sent the last payment and the scammer revealed his identity in a video call. Carolyn asked the bank to recall the funds. It was able to retrieve $3,000. Carolyn complained that the bank should have picked up the scam and stopped the payments. She said she had used the reference “UN funds” when making the payments and argued the bank ought to have known the payments were not going to United Nations accounts. She also said she had been in contact with the bank about the payments she was making.
Published:
August 2021

Our investigation

Banks are under no general obligation to monitor customers’ accounts to prevent them from sending money to scammers. Nor are they obliged to check that a reference used by a customer matches the account into which the funds are going. Banks should, however, act on any red flags that indicate a real possibility the customer is being scammed. We checked for any such warning signs but found none. Carolyn made all payments herself online to a NZ TransferWise account, from where the funds were sent overseas. No bank staff were involved in the payments. In our view, nothing about the payments themselves would have alerted the bank to the fact she was being scammed. We also checked her phone calls to the bank during the month in question and found nothing to suggest she was being scammed. On one occasion, she called the bank to ask it to reverse a payment but explained it was because she had paid the funds to the wrong account – a not unusual event. 

Outcome

We concluded the bank was not responsible for the payments made to the scammer.

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