Call gave bank no reason to suspect funds were going to invoice scammer

Categories:

Fraud & scams, Bank accounts,

Summary:

In June 2024, Garrett and his wife Jenny lost nearly $200,000 in an invoice scam. A scammer altered the bank account numbers on invoices from a legitimate company and sent them to Garrett and Jenny, who were building some houses at the time. Between 25 and 27 June, Jenny made nine payments totalling $203,230 from their joint account. She believed she was paying for water meters for the new houses, but the money went instead into an account set up by the scammer. When the legitimate company followed up about unpaid invoices in July, Garrett realised they had been scammed and contacted the bank. The bank was able to recover $19,916. Garrett sought reimbursement of the remaining $183,314, saying the bank failed to detect the scam and respond appropriately.

Published:

December 2025

Our investigation

We found Jenny authorised the payments via internet banking over three days. At the time, the banks’ confirmation of payee service was not yet operating, so their bank was not obliged to match account names with account numbers when processing the payments. However, the bank’s fraud detection system flagged the payments because of their size, prompting a staff member to call Jenny to verify the payments were genuine. Jenny confirmed they were, saying they were for houses they were building.

Nothing about the call, in our view, gave the bank any grounds to suspect the possibility that Jenny was being scammed, and therefore the bank did not have to reimburse Garrett and Jenny for the loss.

We also found the bank made reasonable attempts to recover the money. It sent recovery requests to the receiving bank within hours and followed up promptly, but by then the scammer had withdrawn or transferred most of the money.