The bank declined to reimburse the loss, saying she had authorised the transactions, and the bank had no reason to suspect a scam. Faith complained to us that the bank had failed to detect the scam.

Our investigation

We reviewed the transactions and correspondence between Faith and the bank, and explained to her that the bank had no general duty to monitor a customer's transactions. Since she had authorised all the transactions using her own banking credentials, the bank’s primary obligation was to follow her payment instructions. It was the customer's responsibility to check that the recipient of the funds was genuine.

We also explained that a bank's duty to exercise reasonable care and skill could, in some circumstances, extend to making appropriate enquiries or otherwise questioning an apparently valid payment request by a customer. A bank might do this if aware of facts indicating a serious possibility the customer was being defrauded. The bank had, indeed, made reasonable enquiries about two of the payments after being alerted to the possibility of fraud, and warned Faith about scams. The bank was not liable for a customer’s losses if it had given the customer an appropriate warning, and the customer had still proceeded.

Outcome

We did not uphold Faith's complaint.