All the care taken but without responsibility

Digital Marketing

When is a scam not a scam?

When it is a bank that operates it and the government supports it.

Do you know what a scam is? In the Cambridge English Dictionary, a scam is defined as “an illegal scheme to make money, especially one that involves deceiving people.”

Do you know that the government is legally protecting banks by operating a scam in which banks assign all risks, liability and responsibilities to the consumer, but not to themselves?

We all do internet banking. When we pay someone and transfer money to their account, we must provide the following details: the account name, the BSB number, and the account number. A warning is provided to ensure that the data is correct and the bank will not be responsible for any mistakes made by the consumer. Despite this warning, we all believe that the bank will transfer the money to the correct account name; otherwise, why should they ask for an account name?

If the customer made a mistake, then one would agree that the bank should not be liable, as they have given a warning. But what happens when the customer is not at fault, but the internal transfer system between banks is at fault? Who is responsible?

Let me give you an example of a recent case where a consumer receives a fraudulent email from their financial advisor where to transfer funds to. In it, the fraudster changed only the bank details. Everything, including the name of the transfer, remained the same. Unknowingly, the transfer of funds took place. The next day, the financial advisor calls to tell you that the money was transferred to the wrong account and to a different bank. His bank was immediately alerted to this fraudulent transaction and eventually 80% of the funds were recovered. She incurred a 20% loss.

It is a case in which the client is a victim who was unaware of a change in the bank details. What the client did or did not do did not influence the outcome of the case. The fraudster knew that the banks did not match the names of the accounts and exploited the internal system of transfer of funds between banks. Is the bank responsible for this loss? Is it negligent not to protect consumer interests by not having adequate security measures in place? The bank was aware of this weakness in its security system, the reason for its warning. The bank denies any responsibility and the matter is taken to AFCA (Australian Financial Complaints Authority) for resolution.

After months of deliberations, AFCA ruled in favor of the bank. He said the bank had no legal obligation to compare accounts and verify where the money is going. Therefore, we have a situation where banks cannot be held legally responsible for any internal transfer of funds between banks. If that is the case, the question arises, who is it? Are the laws intended to protect consumers or banks?

This case exposes a hole in the bank’s security system where scammers, money launderers, etc., are having a field day. There is no protection for the consumer. Banks are safe just by warning their customers about this hole. They are not legally required to put up barriers around the hole, so some unfortunate unsuspecting customer like the one above does not fall into it. They say that we care about everyone, but we have no responsibility and the government supports their position.

Clearly, the government is granting preferential treatment to the banking industry when it comes to consumer protection. The same treatment does not apply to other sectors such as the medical profession, where doctors are often responsible for matters beyond their control. How would you feel if the surgeon, with government backing, warned you about your operation by saying, “I will take care of all the care, but I will not be responsible for any swabs left behind”? Wouldn’t you treat the consumer laws that protect you like a big joke?

The question then arises that if the bank is not legally responsible for any internal transfer of funds between banks, who is? How is the consumer protected? It seems that no one is interested in plugging this hole in the security system because everyone except the hapless consumer is complicit in making money from it.

How ironic that AFCA, the established authority for handling consumer complaints, cannot answer these fundamental questions.

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