Bank had no grounds to suspect transfers were part of a scam

Categories:
Fraud & scams,
Summary:
Stella had a term deposit of $200,000 with the bank that was due to expire in July 2023. Looking for a more competitive interest rate, she went online and gave her contact details to a term deposit comparison website. A man purportedly from a different bank contacted her and she downloaded and filled in an online application form from what she thought was the bank’s portal. The man phoned Stella and said the money would have to be transferred in two instalments and talked her through how to make the first deposit of $100,000 via internet banking. He told Stella the account number to which to transfer the money. The next day, she made a second payment of $100,000 via internet banking to the same account number. She received emails confirming the deposits.
Published:
August 2024

Two months later, the bank learned that the account to which Stella had sent the money had been used to receive funds as part of a term deposit scam. The bank immediately sent a request to recall all international money transfers sent from the account. The bank also emailed other banks where some of the funds had been received, but it was unable to recover any of Stella’s money.


Our investigation

 

A bank’s prime duty is to act on valid payment instructions from a customer. The customer, in turn, is responsible for ensuring the funds are going to the intended recipient and that the recipient is legitimate. Stella authorised the payments to an account at what she thought was a legitimate bank. The bank therefore fulfilled its duty to make the payment in accordance with her instructions. Banks in New Zealand are currently under no obligation to check that an account number and name match when processing a customer’s instruction, or to ensure the customer does indeed want the funds to go to the account number provided. There was nothing to suggest to the bank that the transactions were suspicious.


Outcome

 

We did not uphold Stella’s complaint.

 

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