A woman whose mother sent almost $1 million to an offshore romance scammer has had her complaint about her bank turned down.
The woman uncovered the scam six weeks after her mother took out a third loan and sent the money overseas. She took three loans totalling $365,000 in addition to sending $500,000.
The daughter complained to the bank that the many transfers from her mother’s account to the money remitter, along with the subsequent lending requests, should have alerted the bank to the fraud. She also complained that the lending itself was irresponsible, because her mother was in her 60s and about to retire.
The complaint was taken to the Banking Ombudsman.
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Ombudsman Nicola Sladden said her office found that the bank had complied with its responsible lending obligations.
Although the woman was over 60, she had a number of investment properties that were used as security and the income from those helped with loan repayments.
“We noted it was not unusual to lend to older customers with investment properties who may not be working or who may be stopping work before the end of the loan term. There was no obligation on the bank to monitor [her] transfers to the money remittance service. Plus, she had given credible reasons for the first two loan applications, which would not have alerted the bank to the possibility she was the victim of a scam and was sending money overseas.”
But Sladden said by the third loan the bank should have noticed something amiss.
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 there were enough warning signs at this point that the bank should have asked more questions to satisfy itself it was not a fraud.
“As well as asking for a large amount of money from which she was deriving no direct benefit, there was also the fact she applied for this short-term loan just 12 days after getting her last loan.
“However, we considered she would have given credible answers to any further questions from the bank that would have satisfied the bank: she had done her own research and was convinced about the legitimacy of the person to whom she was sending the money. Her other actions also indicated she was eager to proceed with the lending and would do what was required to get it.”
Sladden said the bank was not responsible for the loss the woman suffered.
She said scams were increasingly common and while banks had an obligation to reimburse customers for fraud from unauthorised transactions, in cases such as this, the customers authorised the payments.
Her office would then assess whether the bank acted with reasonable care and skill.
In another case she dealt with, a woman sent four payments totalling $50,000 to someone she had been talking to online.
Some of the money came from a mortgage top-up she requested to buy a new car. The customer complained the bank did not question her about the transactions. She felt the bank had a responsibility to do more to detect the fraud.
Sladden said, in that case, the bank had failed to act with reasonable care and skill in three of the transactions.
The bank had no evidence that it asked about the nature and purpose of the transactions, and lost an opportunity to identify potential red flags.
”The bank should have questioned [her] or warned her about the possibility of fraud, which might have dissuaded her from making the payments.”
Sladden’s office suggested the customer and bank should share the losses equally.
The bank was told it should pay $20,000 to the customer and $5000 for stress and inconvenience.
“We also recommended the bank should give staff more training and consider how to note risk factors on a customer’s profile.”
The ombudsman does not identify the customer or banks concerned in its decisions.