After numerous emails and phone calls over 10 days, they completed and sent the application form required to open their term deposit for $25,000. The next day, the same caller advised them that the verification process had been completed and the account was live. He emailed the payment instructions to transfer the funds to an account in Australia. However, the transaction was declined because the bank account was invalid. Ayan and Gracie contacted the caller, who sent them a replacement account number. 

Ayan transferred $25,000 from his own bank to the term deposit account via an international money transfer. This payment alerted his bank's system, but on review, the bank allowed the payment because there was no suspicious activity in the couple’s internet banking and the payment was made to Gracie, who was a joint account holder with Ayan. There was no reference to the name of the bank in the payment instruction.

The next day, Ayan and Gracie discovered they had been scammed and reported this to the bank. The bank recovered $190 but refused to reimburse the remaining loss. 

Our investigation

We found the bank acted reasonably when it reviewed the payment. It is not unusual for customers to make payments overseas, and this payment was to a joint account holder. There was nothing that should have alerted the bank to the possibility that Ayan and Gracie were being defrauded. 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. At the time of the payment, banks were not obliged to match account numbers and names.

We were also satisfied that the bank took reasonable and prompt steps to try to recover the funds once alerted to the scam.

Outcome

We did not uphold Ayan and Gracie’s complaint.