A $27,000 payment Ronnie made to his digital banking account in July 2024 alerted the bank's fraud detection system. The bank blocked his internet banking and called him about the purpose of the payment. It asked whether anyone had asked him to make the payment or had told him not to tell the bank the truth if it called. Ronnie was firm in his responses that the money was his and he was telling the truth. The bank explained that it needed to ask these questions because of the increasing prevalence of scams. Ronnie confirmed he understood he would be liable for any loss if the payment turned out to be a scam.

Ronnie continued sending money to the online trading broker until October 2024 when he discovered he had been scammed. The bank refused to reimburse him for his loss of $183,610, but offered him $3,000 compensation for the delay in responding when he reported the scam.

Our investigation

We found that, given Ronnie’s responses to its questions in the July phone call, the bank had no grounds to suspect he might be the victim of a scam.  Good banking practice requires banks to make inquiries about a transaction if they detect (or ought to have detected) the warning signs of a scam. In the absence of such warning signs, however, banks are not obliged to question any transaction, but rather must carry out customers’ instructions.

The other payments were made through internet banking to Ronnie’s own digital banking account, and the bank was not obliged to monitor those.

Outcome

We did not uphold Ronnie’s complaint, but we recommended he accept the bank's offer of compensation, which he did do.