Johnny authorised a first transaction of $4,980 to the account provided by the scammer, but before he could make a second transaction of the same amount, the bank’s fraud detection systems were alerted, and the bank stopped the second transaction. Johnny wanted the bank to reimburse his loss of $4,980, but it declined to do so and he complained to us.

Our investigation

Johnny said he had not intended to make the transaction to the scammer, but we considered he had authorised it. He agreed to set up the internet banking payment to Western Union through his online banking account, and he authenticated the payment by entering the two-factor authentication code sent from the bank. He was aware of, and consented to, the transaction and he therefore authorised it. 

When a customer authorises a transaction, the bank's primary duty is to carry out the customer's instructions. Banks have a duty to exercise reasonable care and skill in providing banking services and should act on possible warning signs of fraud by making inquiries about the transaction and, where warranted, warning the customer about the possibility of fraud. In Johnny's case, the bank had reason to suspect the second transaction was potentially fraudulent and prevented it from going through while it investigated. Within 15 minutes of suspecting a scam, it had begun steps to try to recover the money. This, in our view, as an appropriate response to a potential fraud.

Outcome

We did not uphold Johnny's complaint.