The bank then asked Howard for information about the $300 payment. Howard replied the same day, saying he would forward screenshots of messages from his son. However, the bank told him the next day it would be closing his accounts. It said he had breached its terms and conditions by giving another person access to his card, and reported him as a complicit money mule.

Howard complained that the bank had treated him unfairly. He said it had not given him enough time to supply evidence of his innocence. He also said the bank had judged him for his son’s behaviour when he had no knowledge of any fraud. He said the bank's communication was unduly harsh and accusatory, particularly since he had done nothing wrong.

Our investigation

The bank's terms and conditions allowed it to freeze and close Howard’s account if it reasonably suspected his account had been used to facilitate fraud. The bank formed the reasonable suspicion that Howard’s account had been used to facilitate fraud after being told the proceeds from a scam had been deposited into the account and then spent. It therefore had the right to freeze Howard’s account, and to close his account after giving notice (which it did). 

In examining the bank’s process before it closed Howard’s accounts, we learned Howard had responded promptly to the bank’s questions and had agreed to supply evidence of his interactions with his son. Yet the bank did not give him a fair and reasonable opportunity to do so before deciding to close his accounts and report him as complicit. We therefore found the bank failed to treat Howard fairly and reasonably, as it was required to do.

We also examined whether the bank had reported the activity fairly and accurately on the fraud data exchange. Howard had received and spent scam funds, but that did not show he knew about, or was involved in, the fraud. He had blocked the card his son had access to and spoken to his son about the matter, who had assured him the payments were legitimate. The bank lacked any firm evidence that Howard was complicit in the scam, and we accordingly found the bank’s report did not fairly and accurately reflect the circumstances of the case. What’s more, the bank had also told Howard he was complicit in the scam, had knowingly profited from it and was at risk of reoffending. Those statements, too, did not fairly reflect the evidence the bank held. We found the bank did not communicate with Howard fairly and effectively.

In considering the impact of the bank's failings, we considered the bank would probably still have closed Howard’s accounts if it had followed a fair process, as it had the right to do. Howard had not suffered any direct financial loss. However, the bank’s process and communications caused Howard stress and inconvenience.

We recommended the bank amend its fraud reporting on the fraud data exchange, apologise to Howard and pay him $500 compensation.

Outcome

The bank followed our recommendation, and Howard accepted the apology and compensation.