Source: Banking Ombudsman Scheme
Delays in processing payments while banks conduct fraud checks can be frustrating but are necessary to prevent scams, says the Banking Ombudsman.
Nicola Sladden said the scheme recently investigated a case in which a customer was unhappy with such a delay, and the consequences it caused.
The customer asked the bank to transfer $500,000 so he could buy gold. The bank refused because it was concerned the payment could be a linked to a scam.
The customer later said the delay meant he had to pay more for gold because the exchange rate had changed. The scheme found the bank was entitled to refuse to process the payment while it checked the fraud risk and did not uphold his complaint about the delay. However, the customer accepted $1,500 compensation offered by the bank for how it communicated the reason for the delays.
Ms Sladden acknowledged that security checks could sometimes be frustrating, particularly when urgent payments were involved. However, such measures were a vital part of protecting customers from scam-related losses.
“When banks detect high-risk transactions, they have an obligation to conduct a check. This might be frustrating in some circumstances, but can be seen as a small price to pay to prevent being scammed out of thousands of dollars – as has often happened.”
Ms Sladden said banks were mindful of the need to strike a balance between protecting customers and avoiding unnecessary delays.
She said following a few simple steps could minimise the risk of being scammed. They included independently verifying the identity of an organisation by using its official website or publicly listed contact details, rather than relying on the information provided in a message. She said a genuine representative from a bank or similar organisation would never pressure anyone to act quickly or oppose efforts to verify that person’s authenticity.
Checking the bank’s website for scam alerts was also useful because it kept customers alert to current scams. A final tip was never to share PINs, passwords or one-time codes with anyone.
Ms Sladden said customers who suspected they had been scammed should immediately cease all contact with the scammer and notify their bank. The bank could then secure their accounts and review any suspicious activity.
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