Nothing suspicious about customer’s call or $440,000 payment to scammer

Categories:

Fraud and scams, Investment,

Summary:

Judy was looking to invest her savings in a term deposit. In April 2024, she called her bank, which told her its best rate was 6.1 per cent. Judy looked online to see what other rates were available. She clicked on a link to what she thought was another bank’s rate and filled out an inquiry form with her name and contact details. A person purporting to be from that bank called and offered her 6.55 per cent for a $440,000 term deposit. The caller was a scammer.

Published:

May 2025

Judy phoned her bank and instructed it to make the $440,000 payment. That same day, the Financial Markets Authority issued a warning about fake term deposits by scammers claiming to be from the bank Judy thought she was investing with. Three weeks later, the scam was uncovered. No funds were recovered.

Judy complained that the staff member she spoke to should have forwarded her transfer request to a senior staff member at the bank, that the transfer exceeded the limit on her account, that the staff member should have expressed concern about the fact Judy was being offered a rate much better than that offered by the bank, and that the staff member should have advised Judy about the warning from the Financial Markets Authority which would have led to the immediate uncovering of the scam. She said the bank should compensate her for her loss, but the bank refused. Judy asked us to investigate.

Our investigation

The bank agreed we could consider the complaint which was over the financial limit. We listened to a recording of Judy’s call to the bank to determine whether there was anything that should have alerted the staff member to a possible scam. (If there had been a possible warning sign, or “red flag”, the bank would have been obliged to make inquiries and, if warranted, warn Judy about the possibility of a scam.)

When the staff member asked what the payment was for, Judy said she was transferring the money because she got a “much better rate” than that offered by the bank. Judy did not, however, specify the rate, but even if she had, it was not much higher than the bank’s rate and so would not have appeared too good to be true and raised suspicions.

At the time of the call, the bank was aware of the prevalence and hallmarks of certain investment scams. It has previous experience of investment scams and monitored the media and regulatory announcements for reports about scams. However, we did not consider anything about the call or the regulatory warning, either alone or in combination, put the bank on notice of a real possibility that Judy was being scammed.

We considered it unreasonable to expect frontline bank staff to be aware of the warning from the Financial Markets Authority on the day it was issued or to conduct inquiries into every transfer to the major retailer bank that scammers were impersonating.