Abigail complained the bank should have noticed the account name did not match the “Services Group” reference she added. This was a clear warning sign, or red flag, that should have prompted the bank to make inquiries. Had it done so, she said, it would have detected and prevented the fraud. Furthermore, the bank knew, or should have known, that the account to which she sent her money was linked to scammers. Finally, Abigail said the bank should have taken more care because the payment came from an account that was designed for university students, and also because she was a recent migrant unfamiliar with New Zealand’s banking system.

Our investigation

We considered there was nothing suspicious about the transaction that could have, or should have, alerted the bank to the possibility of a scam. (If a bank detects a warning sign, or red flag, it is obliged to make inquiries and, if warranted, warn a customer about the possibility of a scam before processing the payment.) The transaction was fully automated, and Abigail and the bank were not in contact before or during the transfer. Also, the bank was not required to check that the account number and name matched. The bank’s terms and conditions specifically said the customer was responsible for checking that payment details were correct.  

As for Abigail’s complaint that the bank owed her a higher standard of care because of her student account and her unfamiliarity with New Zealand’s banking system, there was no such higher standard required by the law. In addition, there was no evidence to suggest the bank knew, or ought to have known, that the account to which she transferred her money was connected to a scam.

Outcome

We did not uphold Abigail’s complaint.