Need to know
- A couple in their 80s lost $40,000 to the Telstra bond scam in a payment facilitated by Suncorp Bank
- Both ASIC and Telstra had issued warnings about the scam six months before that the banks should have seen
- The bank account details provided by the scammer would have revealed that a scam was underway but Suncorp didn't even check that the BSB number was for the right bank
The scam went off without a hitch, and both the victims and their bank were taken in.
In December 2021, Ron and his wife Judy*, both in their 80s, were contacted by a man with a British accent who said he was an account manager at Bendigo Bank and used the name of a real Bendigo Bank employee.
The scammer, who Ron describes as 'very personal and plausible', wanted to know if the Queensland couple were interested in investing in Telstra corporate bonds with a 4% rate of return.
The rate seemed reasonable, and Telstra was a household name. After a few more calls from the scammer explaining how the transaction would work, the couple went in person to their local Suncorp Bank branch.
The branch manager and two other bank staff sat down with the couple and facilitated the transfer of $40,000 from the couple's Suncorp account to what was supposedly a Bendigo Bank account for which the scammer had provided the details.
Having received all the supposed investment files, my wife and I sat back in blissful ignorance all through 2022Scam victim 'Ron'
It was easily done. Ron and Judy received several pieces of documentation showing that the $40,000 had been sent to Bendigo Bank, as well as an email from the scammer – using the name of the Bendigo Bank employee – confirming the Telstra bond purchases.
To the couple, the confirmation docs looked legitimate.
The $40,000 was all the couple had in savings, and they never saw it again. Nor did they hear again from the persuasive gentleman who claimed to be from Bendigo Bank.
"Having received all the supposed investment files, my wife and I sat back in blissful ignorance all through 2022," Ron says.
But by November, the couple were getting nervous. They had yet to receive any dividends from their investment, and an internet search seemed to confirm their worst fears.
Telstra bond warning six months earlier
In June 2021, six months before Ron and Judy purchased the so-called Telstra bonds, the Australian Securities and Investments Commission (ASIC) issued a warning, saying "these investment offers are fake".
Telstra issued a similar warning around the same time, saying the company's bonds were not available to retail customers, which would include Ron and Judy.
Investment scams had also hit record highs in 2021, and scam incidents were widely publicised. People 65 and older were the hardest hit, losing $18.8 million by August that year. And, as in Ron and Juldy's case, the most common form of contact from scammers was by phone call. (Total investment scam losses for 2021 were $701 million.)
Don't the banks do their homework? Why didn't Suncorp raise a red flagScam victim 'Ron'
The Telstra bond warnings were easy to find when Ron finally looked, nearly a year after transferring the money.
He acknowledges he should have checked before agreeing to the transaction, but the staff at the Suncorp branch didn't check either.
Suncorp also didn't catch that the BSB number for the bank Ron and Judy's money was being sent to indicated it was not Bendigo Bank but a Commonwealth Bank branch in Parramatta, NSW.
"Aren't all banks notified of such warnings?" Ron asks. "Don't the banks do their homework? Why didn't Suncorp raise a red flag?"
Most scam victims 85 and older are contacted by scammers via phone.
Suncorp says no to compensation
In December 2022, Ron and Judy were officially notified by Suncorp that they'd been scammed.
But the bank put the blame squarely on the couple, saying: "Suncorp is unable to offer reimbursement, because the transactions were performed and authorised by yourself, and Suncorp acted correctly on your instruction."
"My wife and I have lost our retirement nest egg, and been reduced to an extremely tight budget," Ron says. The couple can no longer afford health insurance.
Without responding to the point about the Telstra bond warnings, Suncorp executive general manager, Nick Fernando tells CHOICE that the bank "takes many steps" to prevent scams and works with customers "to investigate and attempt recovery where possible".
Fernando didn't address whether the bank was accountable but did make the point that scammers often transfer money from bank accounts to crypto platforms "where it becomes very difficult to trace and recover".
'We have seen the devastation firsthand'
Victims of banking and investment scams can lodge a complaint with the Australian Financial Complaints Authority (AFCA), which received 4131 such complaints in the 2021–22 financial year and orchestrated the payment of $15,292,650 to victims by the financial firms involved.
In making a determination, AFCA will consider a bank's role in facilitating payment to a scammer, but if the money can't be recovered, the victim is often out of luck.
Ron and Judy have lodged a complaint with AFCA, citing Suncorp's negligence. How the ombudsman service will rule in their case remains to be seen, but AFCA tells CHOICE that in over half the scam-related cases in 2022–23 that AFCA was involved in, victims received either full or partial compensation.
"We have seen firsthand the devastation scams can cause and we've been vocal about the need for a more consistent approach across the banking sector to this serious and sophisticated financial crime," says lead ombudsman for transactions, Suanne Russell.
As it stands, scam victim reimbursement rates by banks without AFCA involvement range from a measly two to five percent, in part because current laws and codes of practice weren't set up to deal with the scam epidemic.
We have seen firsthand the devastation scams can cause and we've been vocal about the need for a more consistent approach across the banking sector to this serious and sophisticated financial crimeAFCA lead ombudsman Suanne Russell
Russell says that needs to change.
"Enforceable standards would provide greater clarity on legal liability, and in turn aid the work we do. As an ombudsman service, we must work with existing law and current codes of practice."
As for whether a bank will be required to compensate a customer who's been scammed, it's complicated.
But in cases where a transaction is authorised by a bank customer, AFCA says it will consider whether there were factors that should have put the bank on notice that something was amiss.
"Every case is different and the outcome will depend on the specific facts and circumstances," Russell says. "Subtle differences can mean different outcomes even if cases seem similar to the outside observer."
(*Names have been changed.)
Stock images: Getty, unless otherwise stated.