It's a shame banks leave victims of internet fraud high and dry
Consumers who have been victims of fraud commonly battle to get their banks to part with information pertinent to the fraud, especially in cases of online banking fraud.
Typically, the banks withhold from fraud victims the names and identity numbers of the account holders who received their stolen money and sometimes the forensic report by the bank ostensibly supporting the bank's allegation the client fell for a phishing attack.
Banks have also been known to refuse to disclose log entries and IP addresses of the computers from which transfers out of the plundered accounts were made.
Lawyers representing victims of fraud have argued that their clients are entitled to this information and that by refusing to provide it, banks hamper victims' understanding of what may have occurred and whether they were negligent as alleged by the bank, as well as efforts to identify the culprits and recover their money.
When the banks do oblige, it tends to be only after they've been issued with a subpoena or high court order. But it is often beyond the customer's resources to go to court and, as pointed out by an attorney who has assisted victims of fraud, "some banks, it seems as an active strategy, rely on customers not having the relevant information to pursue their claims, in the knowledge that this insulates them from claims as customers cannot afford the high cost of litigation to force them to provide the information".
A recent case referred to the office of the FAIS ombud (also known as the ombud for financial services providers) will hopefully prompt the banks to change their approach.
The complaint against an unnamed bank was lodged by a victim of internet fraud committed by an entity that used a web trading platform as a front to solicit investments, according to the FAIS ombud.
The consumer was led to believe the company he was dealing with was properly regulated, that his funds would be kept in a segregated account, and that he would participate in real-time trading. But this turned out to be false and he lost his money.
He asked his bank to give him the name of the bank used by the trading platform, so he could communicate directly with it. But his bank was unwilling to help him.
The consumer approached the FAIS ombud on the basis that his bank's refusal to provide this information hindered the possibility of him protecting his interests. The consumer turned to the ombud's office "after having approached various entities and exhausted all available avenues", according to a media release.
Before officially accepting the matter for investigation, the FAIS ombud's office contacted the bank and "implored" it to consider, in the spirit of treating customers fairly, to help the consumer obtain the information he asked for - "information that the man in the street would not have access to, and which would allow the complainant to further his attempts at reclaiming his funds", the ombud says.
The bank agreed that helping the consumer would be in the spirit of treating customers fairly, "and agreed to investigate the matter on his behalf".
The consumer apparently asked for additional information and "after a thorough investigation" by the bank's fraud investigation unit, the bank was able to provide the consumer with the details of the bank used by the trading platform.
How good of the bank to carry out a "thorough investigation". One would have thought that a thorough investigation was a matter of course in the event of a fraud, but obviously not. And so commendable that it decided to treat its customer fairly.
Since the matter was settled, the FAIS ombud didn't name the offending bank. But it doesn't matter - all banks are guilty of failing to assist their own customers when they are victims of fraud and are at a huge disadvantage when it comes to obtaining and understanding the information they need. It's a disgrace. I might be reading between the lines, but I reckon FAIS ombud Naresh Tulsie thinks so too.
He says his office receives numerous complaints from consumers who have been the subject of fraudulent transactions.
"Financial institutions such as banks, with the resources at their disposal, could offer assistance in empowering the complainant with information that will allow the affected individual to further attempts to rectify the situation. This can only be done where these institutions fully commit to the essence of treating customers fairly, as detailed above, something that this office is committed to fostering," Tulsie says in a statement about the case.