At the scammer’s request, Jenna made two telegraphic transfers of $20,000 each at a branch and broke a $47,000 term deposit in order to make additional transfers. About five internet banking payments were made each day from Jenna’s account. Initially, each payment was for $3,589 and later for $3,987. More than $292,000 was transferred by telegraphic transfers and internet payments. The bank discovered the scam the following month when Jenna went into a branch to make a third telegraphic transfer. The bank investigated and made a goodwill payment of $150,000. Jenna wanted reimbursement of the entire loss and asked us to investigate. She said the transactions were unusual for her and complained that the bank did not call her to check why she was making the transactions.

Our investigation

Jenna had authorised all the payments because they had happened with her knowledge and consent, even though she had been deceived about the payments. Jenna acknowledged giving the codes from the bank to the scammer. We considered whether the bank should have been alerted to the possibility of a scam when Jenna went into a branch to make the telegraphic transfers. If a bank detects such a possibility, it must warn the customer or risk being liable for any loss. We found bank staff made appropriate enquiries about the purpose of the transfers and received plausible, consistent explanations, namely that they were for her son’s business in Thailand. When Jenna phoned the bank to close her term deposit early, she said she was going overseas. Her call to ask how to make a telegraphic transfer was a general enquiry, and her follow-up call on the progress of a transfer was a routine and unremarkable one.

Jenna’s internet banking payments were monitored by the bank’s fraud detection system, and the system did not detect the payments as fraudulent.  

Outcome

Jenna withdrew her complaint.