System alert did not oblige bank to look into possibility of a scam

Common scams targeting bank customers,
Mickey met someone on WhatsApp who introduced him to the idea of buying gold online. Mickey and his wife made transactions in late 2021 and early 2022 using their credit cards to buy what they thought were gold investments online. The first two transactions Mickey authorised triggered a fraud alert in the bank's system. However, the bank could not contact Mickey and put a permanent block on his credit card. Mickey tried to make a further transaction with the same merchant using his credit card in January 2022. When the transaction would not be processed, he called the bank.
October 2023

The bank staff member noticed that his card had been permanently blocked as “lost/stolen”, and issued a new card. Mickey then authorised several further transactions, buying what he thought were gold investments.

When one of the transactions Mickey authorised in February 2022 triggered a scam alert in the bank's systems, the bank rang Mickey to discuss his transactions. The bank uncovered the scam and immediately tried to recover the couple’s funds, but none of the $18,000 that Mickey had lost as part of the scam could be recovered.

Mickey complained to us that the bank had not made sufficient enquiries about the transactions he was making when he rang it in January 2022, and that he would have avoided losing a lot of money if the bank had made similar enquiries that it had in February at this earlier stage.

Our investigation

We reviewed the alert triggered in December 2021 to assess whether the bank, at this point, had sufficient information to suspect Mickey might have been the victim of a scam. The alert was triggered out of concern Mickey might not have authorised the transaction, not that he might have fallen victim to a scam. As a result, the bank did not have an obligation at that point to look into the transactions he had authorised. When it was alerted in February 2022 to the possibility Mickey might be the victim of a scam, it made all appropriate enquiries, and the scam was uncovered. It then took all reasonable steps to try to recover the funds.


Mickey decided to accept a $250 goodwill payment from the bank.


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