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A woman whose mother sent nearly $ 1 million to a foreign romance scammer has had her complaint about her bank rejected.
The woman discovered the scam six weeks after her mother obtained a third loan and sent the money abroad. She took out three loans for a total of $ 365,000 in addition to sending $ 500,000.
The daughter complained to the bank that the numerous transfers from her mother’s account to the money sender, along with subsequent loan applications, should have alerted the bank to the fraud. He also complained that the loan itself was irresponsible, because his mother was 60 years old and about to retire.
The complaint was forwarded to the Banking Ombudsman.
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The ombudsman, Nicola Sladden, said her office determined that the bank had met its responsible credit obligations.
Although the woman was in her 60s, she had several investment properties that were used as collateral and the income of those who helped with loan payments.
“We noted that it was not unusual to provide loans to older clients with investment properties that may not be working or may stop working before the loan term ends. The bank had no obligation to monitor [her] transfers to the money remittance service. In addition, he had given credible reasons for the first two loan applications, which would not have alerted the bank to the possibility that he was the victim of a scam and was sending money abroad. “
But Sladden said that for the third loan the bank should have noticed something wrong.
The woman said she needed $ 165,000 for business retainers for her partner. Bank staff had asked her if it was a scam, but she said no.
“We found that there were enough red flags at this point that the bank should have asked more questions to make sure it wasn’t fraud.
“In addition to asking for a large amount of money from which he did not get any direct benefit, there was also the fact that he applied for this short-term loan only 12 days after obtaining his last loan.
Kirk Hargreaves / Things
Banks have an obligation to act diligently and skillfully, even if customers don’t realize they are being scammed.
“However, we believe that she would have given credible answers to any other bank question that would have satisfied the bank: she had done her own research and was convinced of the legitimacy of the person to whom she was sending the money. Her other actions also indicated that she was eager to continue the loan and that she would do whatever it took to obtain it. “
Sladden said the bank was not responsible for the loss the woman suffered.
He said that scams were becoming more common and that while banks were required to reimburse customers for unauthorized transaction fraud, in cases like this, customers would authorize payments.
His office would then assess whether the bank acted with reasonable care and skill.
In another case she dealt with, a woman sent four payments totaling $ 50,000 to someone she had been talking to online.
Part of the money came from a mortgage recharge that he applied to buy a new car. The client complained that the bank did not question her about the transactions. She felt that the bank had a responsibility to do more to detect fraud.
Sladden said that in that case, the bank did not act with reasonable care and skill in three of the transactions.
The bank had no evidence that it inquired about the nature and purpose of the transactions, and it missed an opportunity to identify potential red flags.
“The bank should have questioned [her] or warned her about the possibility of fraud, which could have deterred her from making payments. “
Sladden’s office suggested that the client and the bank should share the losses equally.
The bank was told it should pay the customer $ 20,000 and $ 5,000 for stress and inconvenience.
“We also recommend that the bank provide more training to staff and consider how to score risk factors in a customer’s profile.”
The ombudsman does not identify the customer or the affected banks in his decisions.
