However, he received nothing after the second 30-day term expired. He searched the company online and discovered its investment scheme was a scam. He had lost $38,500 (after allowing for the $7,500 profit he made on the first payment). He contacted the bank, but it was unable to recover any of the money and declined to reimburse his loss. 

Our investigation

We found Clarence authorised all eight payments using his mobile app. They were legitimate payment instructions that the bank had a strict duty to follow, and nothing about the payments suggested any possibility that he was being scammed. In the absence of any warning signs of a scam, the bank was not obliged to question the transactions and had to do as instructed. We therefore found the bank was not required to reimburse Clarence’s loss.

We did learn, however, that four days elapsed after Clarence told it about the scam before it contacted the recipient bank to ask it to try to recover the money. This was, in our view, longer than reasonable in the circumstances. Even so, we found the recipient bank would not have been able to recover the money because Clarence had made the payments four months earlier. The recipient bank confirmed the money had long gone by the time Clarence reported the scam to his bank. We could not therefore recommend the bank reimburse Clarence on the grounds that it failed to follow the correct recovery process because following that process would have made no difference to the outcome.

Outcome

We did not uphold Clarence’s complaint.