Bank not required to reimburse customer who lost money due to scam...

The Banking Ombudsman has recently decided that a bank was not required to reimburse a customer that had fallen victim to a scam, due to the steps the customer should have taken.

The customer received a text from someone posing to be Waka Kotahi NZ Transport Agency. The text notified the customer that his car registration was due, giving him a link to a website.

The customer went onto the website and entered his credit card details. He also entered three different authentication codes that had been sent to him by the bank. The three transactions amounted to a total of $5,720.

When the customer realised that they had been scammed, he requested that the bank reimburse him. However, the bank only agreed to reimburse the customer for half of the amount he had lost. The customer complained to the Ombudsman.

The Ombudsman noted that banks are required to reimburse fraud losses, only if the customer has acted in a certain way. That is that the customer “has not been dishonest or negligent, complied with the bank’s terms and conditions, and took reasonable steps to protect their banking.”

In this case, the Ombudsman decided that the customer should have taken further steps to protect their banking. There were obvious “warning signs” that the text was a scam.

First, the authentication code texts told the customer that the payments were not going to Waka Kotahi NZ Transport Agency but another person. The transactions were also calculated in Thai baht, rather than New Zealand dollars. $5,720 is also well beyond the amount someone would pay for registering their vehicle.

The Ombudsman therefore concluded that the customer had not sufficiently protected their banking. The bank did not have to reimburse the customer for his loss.

The customer decided to accept the bank’s offer to reimburse him half of his loss.

It is important to be aware of your rights and obligations as a financial customer. If you are confused about these rights and obligations, it pays to seek advice from a professional with experience in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

Alan Knowsley and Hunter Flanagan-Connors