MyState Bank Compensates Elderly Customer in Rare Australian Financial Complaints Authority Ruling
In an uncommon decision, the Australian Financial Complaints Authority (AFCA) has ruled in favor of an elderly customer who fell victim to a scam, leading to MyState Bank compensating over $93,000. This case highlights the importance of banks ensuring the security of their customers’ transactions and the potential consequences of failing to do so.
The Case in Detail
The complainant, an 82-year-old woman, was the victim of an impersonation scam in December 2024. The scam involved two Real Time Gross Settlement (RTGS) payments processed by MyState Bank via telephone. The payments, inclusive of fees, amounted to a total of $99,030. Once the scam was reported to the bank, recovery action was initiated, with $6,274 successfully retrieved and credited back to the transaction account.
Disputed Transactions and Bank’s Liability
For each of the disputed transactions, the complainant instructed the bank to transfer $49,500 into a recipient account named ‘JR’. However, the bank did not check the recipient account name against the account name in the RTGS payment instruction, a fact the customer was not warned about. An AFCA ombudsman, in a recent determination, noted that the bank acted in breach of the complainant’s mandate by not ensuring the correct account name.
“The bank did not warn the complainant that the recipient account name would not be checked against the account name in the RTGS payment instruction,” the ombudsman wrote. “As the disputed transactions were not transferred into an account in the name of JR, the bank has acted in breach of the complainant’s mandate and paid away its own funds.”
Bank’s Responsibility
While the bank was not directly involved in the scam, the ombudsman noted that its liability could have been avoided. If the bank had clearly warned the complainant during the 18th and 20th of December 2024 telephone conversations that the account names would not be matched, it would not have been held responsible. This ruling reiterates the responsibility of banks to ensure the security of their customers’ transactions.
“Providing a contemporaneous warning is not an onerous obligation for the bank,” the ombudsman stated. “Had the bank done so, the complainant’s decision to proceed with the disputed transactions would have indicated an acceptance to modify the RTGS payment instructions.”
Implications of the Case
This case serves as a stark reminder for banks and financial institutions of their responsibility to ensure the security of customers’ transactions. It underscores the need for banks to provide clear and timely communication to their customers, especially when dealing with transfers involving large sums of money. It also highlights the crucial role of regulatory bodies like the AFCA in holding banks accountable and providing a recourse for customers who fall victim to scams.
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