When Amelia discovered she could not withdraw her money, she reported the scam to the bank. Amelia complained that the bank should have identified the transactions as high risk, warned her of this fact, applied safeguards, and done more to recover her money.

Our investigation

A review of the bank’s records showed Amelia used a third-party payment service to make the nine payments. The Code of Banking Practice requires banks to offer compensation to scam victims under certain conditions, and one of those conditions is that victims do not use a third-party payment service. Thus, Amelia was not eligible for compensation for those payments under the code.

The bank’s records also showed that the five debit card payments were made to overseas merchants. The code’s scam protection commitments apply only to domestic payments made to a New Zealand bank account. Again, Amelia was not eligible for compensation for those payments under the code.

As for whether there were any signs that should have alerted the bank to the possibility of a scam, Amelia authorised the transactions using her usual banking credentials. Before the scam was discovered, her only contact with the bank had been a routine inquiry about a credit limit increase. Nothing in that interaction suggested a scam. Also, the bank’s fraud detection systems did not identify the payments as suspicious (and we are not able to review the rules and parameters of banks’ fraud detection systems), so in short, we did not consider the bank should have known Amelia was being scammed. 

The bank contacted the cryptocurrency provider within hours of Amelia alerting it to the scam. The provider confirmed the cryptocurrency had already been delivered and the transactions could not be stopped. Although the bank later contacted the other merchants, the evidence showed those transactions had already been completed on the day they were made. We found the delay did not affect any opportunity to recover the money.

Outcome

We did not uphold Amelia’s complaint.