2021 Media releases

Keep watch for scammers over summer

21 December 2021

As you put your feet up, keep your guard up for scammers over summer, especially online, says Banking Ombudsman Nicola Sladden. The Banking Ombudsman Scheme has updated their scams quick guide to help keep bank customers alert to increasingly sophisticated scammers.

“It’s been a tough couple of years and everyone’s ready for a break. But we urge you to keep a look out for scammers and contact your bank straight away if things go wrong,” says Ms Sladden. “When shopping online, for example for Boxing Day sales, beware of fake sites and only use your card on trusted sites. Courier scams are also rife at this time of year. If you’re contacted out of the blue, stop and think before clicking links or giving any information. And if an offer sounds too good to be true, it probably is.”

Every year, the Banking Ombudsman Scheme receives an increase in complaints about fraud and scams, including investment, sales, invoice, romance, and remote-access scams.

Top tips from our quick guide include:

1. Never disclose PINs or passwords.
2. Check carefully that you’re sending money to a legitimate recipient.
3. Never accept money into your account for subsequent transfer to others.
4. Check your accounts and statements regularly.
5. Contact your bank immediately if you suspect you have been scammed.

The quick guide features common scams and bank obligations to their customers. While there is a general obligation to reimburse customers for fraud from unauthorised transactions (unless customers breach their terms and conditions or act negligently), sometimes customers send their own money to scammers. When payments are authorised, such as with invoice, romance or investment scams, we can consider whether the bank acted with reasonable care and skill.

Case examples

Jennifer - Investment Scam

After Jennifer* sent $230,000 to overseas accounts in an investment scam, she said the bank breached the duty of care it owed her by allowing the payments.  The Banking Ombudsman Scheme found the bank wasn’t aware Jennifer was being defrauded but should have acted more promptly to try to recover Jennifer’s money once notified of the fraud. However, the funds were already beyond the bank’s reach to recover when Jennifer alerted them.

Harper - Romance Scam

Harper* began corresponding with a person online and this relationship had features of a romance scam. The bank made a note about the possibility of a scam. Harper said the bank did not question her about the transactions. She felt the bank had a responsibility to do more to detect the fraud. We concluded the bank had failed to act with reasonable care and skill and should have questioned Harper or warned her about the possibility of fraud.

Pierce – Invoice Scam

Pierce*, the owner of a building company, received an invoice from one of his sub-contractors. But the sub-contractor’s email had been hacked by a scammer, diverting the payment into a different account. Pierce said the bank should compensate him for his loss because he had been the innocent victim of a scam. We explained that a bank’s role is to pay the funds according to the instructions its customers provide, and it had done so.  

See the quick guide here

See more scam cases here

Ask banks how they can support banking for older people and protect against financial abuse

19 November 2021

After $60,000 was stolen from a very elderly man by his “trusted carer”, the Banking Ombudsman says to ask banks what they can do to support the banking needs of older friends and whānau.

Sid*, who was very elderly and had limited mobility, gave his carer his eftpos card and PIN to do jobs and buy groceries. He later discovered the carer had stolen $60,000 from his account over several years. Sid was upset but didn’t want to involve the police. His nephew complained and said the bank should have noticed what was happening.

As Sid had provided his card and PIN to his carer – a breach of his bank’s terms and conditions – his bank wasn’t required to reimburse him for the loss. Sid’s PIN, which should only be known to him, was used to authorise the transactions, and the activity therefore did not trigger any alerts for the bank.

“This very sad case highlights that Sid was in a vulnerable position and needed support with his banking,” says Banking Ombudsman Nicola Sladden. “It’s not unusual for older people to trust friends, family or carers with their bank cards. But this comes with a degree of risk, if the trusted person abuses that trust. The question is what can be done to help older people manage their finances while protecting them from financial abuse.”

Ms Sladden says banks are required to do their best to help meet the needs of all customers, including older customers and customers with disabilities. Banks are also expected to have processes in place to identify customer vulnerability and respond to these customers with extra care.

“Some banks reached out to older people about their banking needs as branches closed and cheques were removed. Checking in on whether bank cards and accounts remain fit for purpose would also be a good idea,” says Ms Sladden. “Ask your bank what they can do to ensure your accounts are meeting your needs. Tell them if you have concerns or if you need support with banking and look out for older friends or family members.”

Ms Sladden says options that are currently available include selecting a trustworthy friend or family member to act as your Power of Attorney to help manage finances. An Enduring Power of Attorney enables that support when people lose capacity. “Talk to your bank now about about how to set this up and what documents are required, to prevent future issues.”

Banks can also help structure accounts to simplify banking, set up separate accounts, automatic payments and direct debits.  They can also apply spending limits, block ATM withdrawals, cancel or block credit cards, payWave and online transactions, and set up alerts for when an account balance drops below a certain level or unexpected payments are made. Some banks also offer special phone assistance for older customers and digital banking training and support. 

In the UK, some banks are offering ‘carer card’ accounts, which give carers limited access to a person’s accounts to protect against fraud or financial abuse. “We encourage banks to consider what additional steps can be taken to improve outcomes for customers experiencing vulnerabilities.” 

Bank customer tips

1. Look out for older friends and whanau and ask your bank what they can do to ensure accounts and cards are fit for purpose and safe.

2. Keep bank cards close, don’t share your PIN.

3. Check account statements regularly.

4. Ask about options for enabling a trusted person to have appropriate access to bank accounts, while keeping savings and investments safe.

5. Report any concerns of theft to your bank and the police immediately.

See our Quick Guides: Financial abuse of the elderly, Powers of Attorney, and Cards and PINs

See the Case note: Elderly customer handed over card and PIN to "carer"

Banking Ombudsman receiving 40 cases a month about fraud or scams

15 November 2021

Contact your bank immediately if you think you’ve lost money to a fraud or a scam, says Banking Ombudsman Nicola Sladden.

This week is Fraud Awareness Week, and the Banking Ombudsman Scheme continues to receive a steady stream of fraud or scam cases, about 40 a month.

“We know this is the tip of the iceberg and scammers are everywhere,” says Ms Sladden. “Be careful online, stop and think before clicking links, and if an offer seems too good be true, it probably is. If you think you’ve lost money to a scam, contact your bank - and the police - immediately.”

“Banks have a general duty to reimburse customers for fraud from unauthorised transactions, unless they can show the customer was negligent or breached their terms and conditions, for example by sharing their card or PIN number. When customers authorise payments - such as in romance or investment scams - we look at whether the bank acted with reasonable care and skill. Did they followed up on ‘red flags’ for example, and did they try to recover the payment promptly.”

See recent Banking Ombudsman Scheme cases and guidance on ‘recovery room’ scams, which target scam victims desperate to retrieve their money, below.

Romance scam victim remained determined despite warnings

Vern*, an older man, was convinced his online romance was the real deal. He sent $60,000 over two months to his ‘girlfriend’ in Asia, through a series of international transfers via Central America. Vern’s bank warned him twice about possible fraud before his first $20,000 transfer and blocked his next attempt to transfer $26,000. Vern complained, transferred the $26,000 to another NZ bank, and sent it to the fraudster. This bank also raised concerns and Vern’s family complained to the police. But Vern remained determined. He withdrew $14,000, deposited it into someone else’s account, and got it through to the fraudster this way. Vern’s son called the bank to say his father was still being scammed. The bank made a note, but then Vern made cash advances of $11,000 on his credit card and sent it all to the fraudster.

Vern’s son complained.  “Romance scammers exploit people’s emotions, and it can be difficult for victims to accept they have been duped,” says Ms Sladden. “In this case, we were satisfied the bank acted reasonably and Vern had been sufficiently warned. But despite the banks’ warnings and action, and Vern’s family’s involvement, he remained infatuated and determined.”   

However, when Vern’s son phoned the bank to say Vern was still caught up in the scam, we noted the bank should have done more.  The bank acknowledged this and refunded $11,000 to Vern.

Online investment scam victim says bank should have noticed

Antoinette* sent all her $150,000 savings overseas to invest (via a remittance company). When she discovered she’d be scammed, she immediately contacted the bank, but they were unable to retrieve the funds. Antoinette said the bank should have noticed and stopped it. “A common misunderstanding is that banks monitor customers’ accounts to prevent them from sending money to scammers,” says Ms Sladden. “The customer is responsible for checking the intended recipient is genuine. In this case the customer authorised the payment to a legitimate remittance company.”

Recovery room scams

“Recovery room scams target people who have already been scammed,” says Ms Sladden. “It seems especially cruel to prey on people in this vulnerable position. They might be feeling embarrassed, and desperate to retrieve their money.” Recovery room scammers, who might be connected to the original scam, often pose as a regulator or government agency. Next, they ask for a ‘recovery fee’, often by credit card, to recover your money, but the customer never hears back.

Both Bob*, who lost $148,000 to a romance-investment scam, and Jim*, who lost $20,000 to a binary options scam, were contacted by “fraud recovery specialists” who pocketed the recovery fee before cutting ties. Jim, who was elderly, first contacted the bank to ask for the transactions to be reversed. While he waited for the bank’s response, recovery ‘specialists’ contacted Jim and said they’d help for a $2,000 fee. He then approached another lot of ‘chargeback specialists’, which took more money from him.

“Be wary of anyone claiming they can get your money back. Instead contact your bank, the police, or contact us,” says Ms Sladden. “Our service is free and independent service. We’re here to help.”

See our quick guide on recovery room scams and common scams.

See recent cases: Vern’s romance scam, Antoinette’s online investment scam, and Harriet’s Facebook lottery prize scam.

*not real names

Want a loan? Be prepared for more questions from lenders

22 October 2021

If you want to borrow money, allow time, be prepared, and be clear, says Banking Ombudsman Nicola Sladden.

Banks, and all lenders, will need to ask more questions before they can approve loan applications when changes to the Credit Contracts and Consumer Finance Act (CCCFA) come into force on December 1. The Banking Ombudsman has issued a guide on what to expect.

“We welcome the changes, which will help protect consumers from unaffordable debt,” says Ms Sladden. “The new requirements will help to ensure all lenders do a comprehensive job of understanding their customers’ circumstances before approving a loan.”

Ms Sladden adds she expects to receive complaints and enquiries about the changes, as is often the case when bank obligations change. “There can be a fine balance between customer protection and convenience,” says Ms Sladden. “Lending applications will be more comprehensive and are likely to take longer, so we encourage you to plan ahead.”

In a recent case, Jacob* - who applied for lending approval three days before a property auction – complained he didn’t get approval on time and couldn’t bid. However, he didn’t have all the information required, and was warned by the bank the timing was too tight. “Last-minute lending approvals are even less likely to get through. If you’re house-hunting, get in early and find out from the bank what you need to do to prepare.”

Lenders may require more information to assess whether loans are affordable, including recent and reliable evidence of income (including any foreseeable change to income), debts and expenses. This applies to small loans, changes to existing loans, or credit limit increases.  “From December it is explicit that all lenders are expected to carry out full affordability assessments even for a simple credit limit top-up. This will provide further protection from credit card lending practices of the past – like for Ellen*, who earned $27K on ACC and received a $24K credit limit increase in 2016.”

Lenders must be satisfied the borrower can make loan repayments without suffering substantial hardship. From December, lenders must also be able to provide records of all their inquiries, including their assessment of why they were satisfied the loan was both suitable and affordable. “The changes may mean that some lending, which was previously approved, will no longer be approved.”

Want a loan? Tips for banks customers

1. Allow time: to have discussions and work through the process with your bank.
2. Be patient: remember banks are not allowed to provide lending unless they follow this process.
3. Be prepared: by asking your bank what you need and gathering all recent information about your income, debts and expenses.
4. Be clear: about your reason for the loan, and the amount you need and why.

See our quick guide: Changes to consumer lending.

See the Commerce Commission Responsible Lending guidance here.

Complaints about banks up, but dispute numbers down

6 September 2021

Complaints about banks were up 6 per cent on the previous financial year, although dispute numbers were down 3 per cent, according to the Banking Ombudsman Scheme’s latest annual report.

Banking Ombudsman Nicola Sladden said she attributed the rise in complaints to a greater willingness by customers to seek help when they had problems with their bank.

“We encourage customers to speak up, ask questions and make complaints. It’s inevitable that things will sometimes go wrong. What matters is how problems are put right.”

Ms Sladden credited the scheme’s early resolution service for the drop in disputes, saying it resolved 96 per cent of complaints without escalation.

“The key is to nip problems in the bud early. When people have problems, they need to be heard and responded to as quickly as possible.

“Our new fast-track process for resolving complaints by customers in financial difficulty proves this point, and we’ve seen cases where banks have responded with exemplary promptness and support.”

In total, 3,149 people made complaints to the scheme during 2020-21, while a further 1,524 made enquiries and 140 escalated their complaints to disputes.

Ms Sladden said unclear or inadequate communication was at the root of many of the complaints.

The most common complaints were about bank accounts and lending (home loans, credit cards, overdrafts, personal and business loans). This was followed by payment methods (such as internet banking and overseas transfers), bank cards and investments.

She said the closure of branches and ending of cheques had also resulted in complaints.

“COVID-19 has accelerated the already rapid change to digital, contactless banking. Although banks have provided help for this transition, there’s no doubt some people have felt left behind.

“We continue to receive a steady stream of complaints from people who had lost money in scams or through fraud. Scams, including telco, romance and investment scams, can affect anyone and can be truly devastating. We urge people to be extra careful online, and to contact their bank immediately if they think they’ve been scammed.

“In general, we consider whether banks have treated customers fairly, communicated clearly and acted with reasonable care.”

The report features cases where banks fell short in these areas. These include giving an inadequate response to a hardship request, offering unaffordable credit increases, and ignoring a problem gambler’s request not to be given personal credit.

Ms Sladden said the scheme’s work also had a prevention focus, which included analysing complaints and sharing the resulting insights.

Two milestones during the year were the establishment of a dashboard to track complaints about banks and a whistleblowing service to help to improve conduct in the sector. The dashboard revealed banks reported more than 100,000 complaints during the financial year.

See the annual report here.

Over 700 credit card complaints received this year, says Banking Ombudsman

30 June 2021

The Banking Ombudsman Scheme has received over 700 credit card complaints this year (from 1 July 2020).

“Banks reported nearly 8,000 customer complaints about credit cards from January to December last year,” says Banking Ombudsman Nicola Sladden. “Many of those complaints were resolved quickly, with less than 10 percent referred to our free and independent service to investigate.” 

Two recent Banking Ombudsman investigations highlight the need to speak up if you need extra help, or if you are in a vulnerable situation. “Banks are required to communicate clearly and effectively, to treat customers fairly, and to provide extra support to those who need it,” says Ms Sladden. “While banks are working hard to improve customer care, particularly for those experiencing vulnerabilities, some customers can fall through the cracks.”

Banks share complaint data and launch staff whistleblowing service

3 March 2021

Banks are sharing their complaint data and encouraging staff to raise concerns through an independent whistleblowing service.

Minister of Commerce and Consumer Affairs David Clark says “New Zealanders rightly expect banks to operate with high integrity, and to treat their customers and staff fairly. I’m pleased to launch the Banking Ombudsman Scheme’s complaints dashboard and independent whistleblowing service. These initiatives will help achieve higher standards of conduct, culture and customer care across financial services in New Zealand.”