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Banking Ombudsman Receiving 40 Cases A Month About Fraud Or Scams

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

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