In October 2023, a woman convinced Lachlan to send $7,000 to an Australian bank account. Lachlan made the payment via his mobile banking app. However, the bank's fraud detection systems flagged the transaction as suspicious. The bank called to ask Lachlan some questions about the transaction. After a long discussion, the bank warned Lachlan he had probably been taken in by a romance scam. The bank was able to return the money to Lachlan because the payment had not yet been processed. It warned him not to send money to anyone without first verifying the individual’s identity in person.

Lachlan did not heed the warning. Following a series of calls, the scammer was able to convince Lachlan their relationship was genuine, and that it was safe to forward some desperately needed funds to her. Over the next six weeks, Lachlan sent her $90,000. In contrast to the first payment, the $90,000 was paid into New Zealand bank accounts. Lachlan eventually realised he had been scammed, but he complained the bank could have done more to protect him. He said the bank knew he had almost been scammed once before, yet it failed to make enquiries or give him any warnings about the large transactions he subsequently made.

Our investigation

When a bank suspects a payment is connected to a scam, it must make enquiries and, if warranted, warn the customer. If, however, the customer continues with the transaction despite the warning, the bank is not usually liable for any loss. In this case, the bank had given Lachlan a clear and explicit warning over the $7,000 payment, saying that if he proceeded with further payments to the same person, the bank would not be liable for any losses. Having given that warning, the bank was under no further obligation to monitor his accounts or question any subsequent payment instructions. In short, the bank was not liable for his loss.

Outcome

We did not uphold Lachlan’s complaint.