Client Who Loses $ 200,000 in Investment Scam Fails in Attempt to Charge Bank


A woman who lost $ 200,000 to an international investment scam turned down an offer of $ 1,500 in compensation from her bank.

The woman sent $ 230,000 to overseas accounts during the scam, from which the bank was able to recover $ 30,000.

She argued that she should repay him the rest as she breached her duty of care to her to protect her financial interests and also violated anti-money laundering laws.

She complained to the banking mediator, who said that a duty of care was usually in place in relationships of trust, such as between a patient and a doctor or a lawyer and a client, but that she did not care. normally did not apply to the bank.

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“The bank should not [her] a fiduciary duty, but he owed her an obligation to act with reasonable skill and care, ”he said.

“We believed the bank had complied with this requirement because it had properly followed its instructions to transfer funds, it had complied with industry practice in requiring two-factor authentication to ensure that he was really [the customer] make the payment and there was no warning sign (red flags) to alert the bank of the fact [she] was involved in a scam.

The client argued that the bank violated anti-money laundering laws by failing to detect transactions and issuing a suspicious transaction report. But the ombudsperson’s office said it disagreed because the law was designed to catch people who knowingly launder money and send it to terrorists.

“The law specifically prevents banks from notifying customers if they suspect such activity.”

The banking ombudsman says people should beware of scammers over the summer.


The banking ombudsman says people should beware of scammers over the summer.

The ombudsperson’s office said the bank should have acted faster in an attempt to recover the money once it was told it had been defrauded.

The delay didn’t cost her any money as he was already out of the bank’s reach when she was alerted.

“Even so, we offered $ 1,000 for distress in addition to the bank’s $ 500 offer for inadequate communication and service.”

The customer declined the offer.

Banking ombudsman Nicola Sladden said it was important for people to be wary of scammers during the summer.

“It has been a difficult few years and everyone is ready for a break. But we urge you to stay on the lookout for scammers and contact your bank immediately if things go wrong, ”she said.

“When shopping online, for example for Boxing Day sales, beware of fake sites and only use your card on sites you trust.

“Mail scams are also rife at this time of year,” she added. “If you are contacted out of the blue, stop and think before you click on links or give out information. And if an offer sounds too good to be true, it probably is.


New Zealanders have lost $ 23 million to scams over the past 18 months, with the majority of victims remaining silent about being duped. (Video first published in October 2020).

Sladden said his office receives more complaints about frauds and scams each year, including investing, selling, billing, romance and remote access scams.

She said people shouldn’t divulge their PINs or passwords, should verify that they are sending money to legitimate recipients, shouldn’t accept money to be sent to someone else. , should check their accounts and statements regularly and should contact their bank if they suspect they have been scammed.

In another case handled by her office this year, a woman was caught in a romance scam.

Her bank noted the possibility of a scam, but said it was not questioning its transactions.

She sent $ 50,000 overseas in four transactions, taken on a mortgage she said she said was to pay for a car.

The ombudsman’s office said the bank failed to act with reasonable care and skill in handling three of the four transactions.

“We found no evidence that the bank requested [her] on the nature and purpose of the transactions, thus losing the opportunity to identify “red flags”, ie indications of a possible scam, “he said.

“He also failed to respond to two clear red flags – the note on a possible scam when [the customer] canceled a payment abroad and [she] collected and sent the proceeds of an overseas loan to be used to purchase a car.

“The bank should have questioned [her] or warned her of the possibility of fraud, which could have deterred her from making the payments. “

The ombudsman’s office said she may still have completed the transactions, but may also have had doubts.

“We recommended that he share equally with the bank the losses of three of the four transactions. We also noted several service failures, including delays in reviewing [her] complaint and considered that this created unnecessary stress which justified compensation.

“We recommended to the bank to pay [her] $ 20,000 for direct financial losses and $ 5,000 for stress and inconvenience. We also recommended that the bank train its staff more and think about how to score risk factors on a client profile.

The customer accepted the offer.

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