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Two scam victims who lost more than $400,000 to offshore criminals have won confidential payouts from two of the country’s biggest banks after separate investigations by the banking watchdog.
The first case involves awidowed pensioner who sunk north of $100,000 into a Facebook hacking scam– making 13 international payments with assistance from ASB staff between February and June last year.
In both cases the banks had earlier refused liability and blamed the victims for authorising the transactions, arguing there were no signs the payments were suspicious.
But after detailed investigations by the Banking Ombudsman, Kiwibank and ASB have agreed to settle the cases with financial payments that are cloaked in secrecy – though neither is accepting liability or admitting failure.
“Banks are the last line of defence and we need them to do better.”
‘It means they accept responsibility’
In the ASB case, the pensioner’s family says the protracted saga has taken a significant toll on the frail 85-year-old victim’s mental and physical health.
They wish ASB had taken responsibility for its part in the West Auckland woman’s life-changing loss much earlier rather than dragging the case out for more than a year.
“It means they accept responsibility,” the victim’s daughter told the Herald. “This is a win.”
The pensioner was tricked into sending her life savings overseas in the belief it would unlock an imaginary Covid-19 subsidy payment after scammers hacked her friend’s Facebook account and sent her hundreds of fake messages.
And though ASB eventually identified the fraud after the victim had made 13 international money transfers – all of them in person at her local branches – none of the funds were recovered, and her family was furious bank staff did not alert relatives or police.
After the family learned of the scam, they complained to ASB about its failure to identify any “red flags” in a vulnerable customer of 60 years making repeated offshore money transfers to multiple accounts.
ASB. which made more than $700m in profit last year. defended its actions and refused to compensate the family. The bank said the victim had authorised the payments, told staff she knew who was receiving the money and was confident she wasn’t being scammed.
The bank also said it was acting on the victim’s instructions not to alert family or police and had to respect her wishes.
Incensed by the bank’s position, the family complained to the Banking Ombudsman, which launched an investigation late last year.
A West Auckland pensioner was tricked into sending her life savings overseas after scammers sent hundreds of fake messages through social media. Photo / 123rf
This week, the victim’s daughter confirmed a financial settlement had been reached.
She would not reveal details of the settlement due to confidentiality but said her mother was “over it” and it was a relief to finally have a resolution.
While ASB continued to deny liability, the financial settlement suggested the bank had accepted some culpability, the daughter said.
ASB declined to comment citing confidentiality.
Kiwibank manager helped victim send $300,000 to scammers months after FMA warning
In the Kiwibank case, the state-owned bank was accused of negligence for failing to detect red flags and not conducting proper due diligence before processing the victim’s $300,000 payment.
The victim was duped by an offshore criminal syndicate posing as Citibank portfolio managers and thought she was investing in Barclays Bank bonds.
Instead her money allegedly went to the ASB savings account of a Whanganui “money mule” who is now facing a raft of money laundering charges in connection with seven alleged victims and total losses of $1.5m.
It later emerged the Financial Markets Authority had issued a public warning about the scam four months before the victim lost her life savings.
After realising she’d been duped, the victim alerted Kiwibank but staff were unable to recover the funds and declined to accept liability.
She then hired top law firm Meredith Connell to press for compensation.
In a November 2023 letter to the bank, Meredith Connell associate Stephanie Cann claimed her client visited the bank in person believing that trained staff would identify anything suspicious.
It’s alleged the manager processed the payment without questioning the victim about the nature of the transfer or whether the payment could be subject to fraud.
“She basically said, ‘Sign it’ and stamped it, and that was it,” the victim earlier told the Herald.
A woman lost her $300,000 life savings after a Kiwibank branch manager helped her send the money to scammers.
Cann alleged, “Kiwibank has failed to recognise or ... flag suspicious activity” and should have been on notice for the fraud from the FMA warning.
“Kiwibank should have investigated the matter more fully and determined that the transfer was to be paid into an account that was likely used for illegal activity,” she said.
In a reply to Meredith Connell, the bank defended its actions, saying staff followed “standard processes”.
It was “difficult” for staff to identify fraudulent transfers from legitimate “in the moment” – particularly when customers had authorised the transaction.
Kiwibank said it was “dependant” on customers doing their own due diligence.
“In this case, there were no red flags that should have prevented our branch team from following through with the customer’s instructions.”
The victim then complained to the Banking Ombudsman, who launched an investigation last year.
