2016 - 2017
Mr X emailed Ms W to book rooms at her motel for himself and several associates. He asked Ms W to split the bill between two credit cards. One charge was successful, but the other was declined. Mr X then asked Ms W to charge the other half to the card that accepted the first charge. The total bill was $4,500.
A week later, Mr X emailed Ms W to cancel the rooms because one of his associates had died suddenly in Spain. Mr X also said he had cancelled his cards after losing his wallet, so he wanted a refund to be made to a new card or via a telegraphic transfer. After calling her bank, Ms W replied that she could make the refund only to the original card. Mr X reiterated that his cards had been cancelled and forwarded a letter from his Spanish bank saying it would not allow any activity on his disused cards.
Ms W spoke to another organisation (not her bank), which told her it was impossible to do a refund to a different card and suggested she did a transfer. Two days later, Ms W went into her local bank branch and sent the refund ($4,000 after the cancellation fee) to Mr X via telegraphic transfer.
It turned out Mr X was a fraudster who had used a stolen card to pay for the motel booking. The card’s owner discovered the charges and asked for a chargeback. This duly happened. Having already sent money to Mr X, Ms W was left $4,000 out of pocket.
When she complained to her bank, it offered to pay half of the loss, but Ms W wanted full reimbursement because she said the bank told her to do a telegraphic transfer. But for that advice, she would not have lost any money. The bank said it did not tell her to do the telegraphic transfer and simply followed her instructions when she asked it to do the refund so it wouldn’t agree to full reimbursement.
We found that the bank was entitled to reverse the credit card payments under its agreement with her. Furthermore, there was no reason for it to suspect fraud when she asked it to do the telegraphic transfer, nor was there any evidence supporting Ms W’s claim the bank told her do a refund that way. This advice came from another organisation Ms W had contacted.
Also, oddities about Mr X’s emails ought to have raised doubts in her mind (but not with her bank) about whether he was genuine. We told Ms W we had not recommended compensation in previous cases in which a bank merely acted on a customer’s instructions and had no reason to suspect fraud.
We advised Ms W it was unlikely we would recommend more compensation than the bank had offered. She accepted the $2,000.