The Banking Ombudsman has ordered a bank to pay a customer $6,000 after it waited too long before attempting to recover a fraudulent transaction.

The customer had been duped by a scammer into providing their account details and verification codes. The scammer made three withdrawals of $5,900, $9,500 and then $4,700.

The first transaction failed, but the second and third transactions were successful. The customer notified their bank on Friday evening, but the bank did not contact the receiving bank to recover the funds until Tuesday afternoon.

The Ombudsman queried other banks on their practices. It determined that the $9,500 transaction that had been processed during business hours on Friday had likely been withdrawn on Monday. Therefore, regardless of how quickly the bank acted, it would have been too late.

However, the third transaction for $4,700 was not processed until Monday morning. Had the bank acted promptly in response to the fraud notification, it would likely have been able to recover the funds.

The Ombudsman recommended the bank pay $6,000 for the loss of the third transaction and inconvenience of the second. The customer accepted this recommendation.

The customer was liable for their losses because they had provided the scammer with all of their information. However, this did not relieve obligations on the bank to attempt recovery of the funds in a reasonable time, once notified of the fraud.

If you have an issue with your bank, it pays to speak to a professional experienced in this area, to understand your rights.

Alan Knowsley
Litigation Lawyer