Bank contributed to loss by failing to have dedicated fraud line in place

Categories:
Common scams targeting bank customers,
Summary:
In May 2023, Cassius received a call from someone who said they were from his bank’s fraud team. The caller said the bank had detected that someone in the United States had compromised his accounts and that Cassius had to take urgent steps to avoid losing any more money. The caller persuaded Cassius to install remote access software on his phone and computer so they could scan the devices for malicious software and secure his bank accounts against further unauthorised access.
Published:
May 2024

However, the caller was a scammer, and they started transferring a total of $37,000 out of his accounts. Afterwards, Cassius became suspicious and contacted the bank. It was able to recover $13,000, leaving him with a loss of $24,000.

Our investigation

Our investigation Banks’ online fraud guarantee requires them to reimburse any unauthorised transactions from a customer's account unless the bank can show that the customer was dishonest, negligent or breached the bank's terms and conditions. We considered Cassius had been negligent. Cassius said he began to suspect something was wrong during the call, and that the scammer, to allay his concerns, told him to hang up and call the bank back. However, the scammer had already installed remote access on Cassius’ phone, so when he went to look up the bank's phone number, the scammer took control and showed him a fake Google search. It listed a phone number for the bank's fraud department that belonged to the scammer. Cassius acted negligently in this moment by trusting the number provided by the caller, rather than verifying the bank's phone number himself. Cassius’ negligence had contributed to his loss, so the bank was not required to reimburse him under the online fraud guarantee.

However, the bank also contributed to the loss by failing to put in place adequate systems to respond to reports of fraud. When Cassius realised he had been scammed, he contacted his bank immediately. The bank did not have a dedicated fraud line or a process for prioritising customer fraud reports, and Cassius waited on hold for more than an hour before he was able to speak to anyone. It is standard practice for banks to have a priority contact channel for customers to report fraud, and if there had been one, it is very likely the bank would have been able to recover a greater portion of the lost funds.

Outcome

The bank offered to reimburse the entire $24,000 loss, and Cassius accepted the offer.

Print this page