Firefighter's warning after losing life savings to sophisticated bank scam

Cath Mulalley is not your typical scam victim. An intelligent firefighter of many years' service, she knows how to spot a dodgy text or spam email. But that didn't stop her falling prey to a cunning foreign fraudster, thanks in no small part to her bank failing to spot the warning signs. George Block reports.

A Nelson firefighter has sounded the alarm after sophisticated bank scammers swindled her out of most of her pension.

Adding insult to financial injury, staff at her BNZ branch actually helped Cath Mulalley send the $325,000 to the mystery foreign fraudsters without questioning the transfer, or attempting to verify whether the recipient was in fact New York banking giant Citi.

She spoke out to warn others about what she says is a surprising lack of protection or guarantees if you are unfortunate enough to fall victim to a financial con.

Her tragic story comes amid a shocking rise in similar scams.

Banking Ombudsman Nicola Sladden has revealed scam and fraud case numbers were up 50 per cent in April to June this year compared with the previous quarter.

Scam numbers in the latest quarter were double those of the same time last year, Sladden says.

In Mulalley's view, the saga begins several years ago when the level of personalised, one-to-one service at her BNZ branch in Nelson began to wane.

"When we first joined BNZ we would go in and sit down at a table with somebody and discuss what our plans were, and they would advise us," she said.

"You felt valued as a customer."

But that all changed in recent years, she said.

The friendly staffer she used to sit down with was relegated to a role behind the counter.

Every time Mulalley went into the branch in recent times she was directed to use a touch pad screen to do her banking.

It was at that touch pad where she would lose her London Fire Service pension amounting to $325,000.

This year, Mulalley, who worked as a qualified firefighter in Nelson for several years after immigrating from the UK, was searching online for a life insurance policy for her and her husband.

She happened upon a generic website that asked if she was looking for investment opportunities as well as insurance. She ticked yes, also entering her contact details.

A number of companies phoned Mulalley, among them a convincing-sounding man who said he was a banker with American multinational bank Citi.

He said they offered slightly better rates for term deposits than other banks.

Mulalley said his offer appealed because she wanted something safer than the sharemarket.

"He was very persuasive, but also very engaging."

He rang her several times and gave her an Auckland number to ring back on.

When she called the number she connected with a "receptionist" who transferred her to him. The man sounded professional and had an English accent, she said.

One of a number of convincing emails sent to Cath Mulalley from scammers purporting to be from Citibank. There is no Sam Jones working for Citibank in New Zealand, but other details are correct. Photo / Supplied

She received a number of convincing documents, some of which appeared to be prospectuses lifted from Citibank's website, and was asked to provide her driver's licence and household bills as proof of identification.

Mulalley was then given instructions on how to make the transfer, which she took into her bank.

She told someone at the counter about the huge transfer she wanted to make to the supposed Citibank representatives.

The staffer instructed her to use the touchpad to raise her transfer limit.

She had a sheet of paper with the scammers' banking details, including the account name and number.

The staffer showed her how to enter the details for the transfer.

"But they never questioned," she said.

Before she knew it, her $325,000 pension was gone.

The Banking Ombudsman said victims are sometimes "groomed" by the scammer to give answers to their bank that will not raise red flags.

However, several red flags indicated the supposed Citibank account was not what it seemed.

A form titled "client remittance details" showed the account she was sending her life savings to was an ANZ account linked to a branch in Johnsonville, Wellington.

The name of the account was Hargreaves Trust - a BNZ staff benefit fund originally started by a retired bank officer in 1936 for the "indigent widows of BNZ bank officers" according to the bank's website.

Mulalley is not the typical victim of a financial scam. She knows to delete dodgy text messages and unsolicited emails with links.

"But I had no idea of this level of sophistication," she said.

"BNZ say that they have done nothing wrong.

"But I feel like they have totally, and utterly let me down in their service, because they didn't ask the questions that they should have."

This week, following inquiries by the Herald on Sunday, ANZ rang her to say they'd recovered about $60,000 of her funds. There is no hope for the rest, she said.

"It's all gone overseas."

Mulalley has lodged complaints with BNZ and the police about the scam.

A BNZ spokesman said the bank understood the distress the fraud had caused Mulalley.

Its investigation was ongoing, he said.

"While it's not appropriate to share specific details, there are a number of features that made this scam difficult to spot. This is a reminder of the sophistication of investment scams.

"They are often very well-crafted, mimicking almost exactly legitimate investment firms and financial institutions."

Nelson firefighter Cath Mulalley lost most of her pension to a sophisticated Citibank scam. Photo/Supplied

A police spokeswoman said Mulalley's report was "under initial assessment".

ANZ said it was aware of the matter but could not comment on specifics.

"This is a really unfortunate situation and we sympathise with those involved," a spokeswoman said.

"We take measures to reduce fraud by acting on information shared with us by customers, authorities and other banks. This can include freezing or closing accounts identified through suspicious transactions and stopping subsequent payments reaching or leaving these accounts."

Guy Matthews, Citi's Sydney-based corporate affairs head for Australia and New Zealand, said his company does not offer financial products or services to retail clients in New Zealand.

Legitimate Citi emails will end in citi.com - but the bank will not email unsolicited investment offers to individuals. The scammers' emails to Mulalley ended in citifixedinvestments.com

In addition to the two fake banker names used to contact Mulalley - Geoff Ledger and Sam Jones - Matthews said he was also aware of the name Mike Green being used by the scammers.

Banking Ombudsman Nicola Sladden said the sending bank is unlikely to be liable when a customer instructs it to send money to someone and they later find out the recipient was a scammer.

"Though banks may be liable if they fail to detect warning signs of a scam," she said.

"We expect banks to have processes in place to identify and act on red flags.

"Red flags can include where a customer was evasive or unwilling to provide information about the purpose of a transaction, or where their description of the purpose had a hallmark of a scam."

Sladden said funds are often sent directly to overseas banks, but are sometimes transferred to another Kiwi bank account, as happened with Mulalley's case.

"We expect the New Zealand recipient bank to co-operate with the sending bank's attempts to recover the funds once the sender has realised they have been scammed.

"Unfortunately, recovery is often not possible despite the banks' efforts: in most instances the recipient has already passed on the money and there is very little or nothing to recover."

If a customer isn't satisfied with the outcome of their bank's handling of their fraud reimbursement claim, they can either complain to their bank directly or to the Office of the Banking Ombudsman.

TOP TIPS TO AVOID SCAMS

• Never disclose PINs or passwords or save them in any way – including in your internet browser settings or in disguise.

• Investigate recipients to ensure they are genuine before sending funds.

• Check with someone independent and trustworthy before you make significant commitments.

• Never accept money into your account for subsequent transfer to others.

• Check your accounts regularly to ensure money is going to the right places.

• Contact your bank immediately if you suspect you have been scammed.

Source: Banking Ombudsman Nicola Sladden