Banks under pressure to refund stolen funds as scam cases increase
Calls for stronger protections for Canadian bank customers are growing amid a rise in scams, with many victims expressing shock after their banks refused to reimburse stolen funds.
Two women from Ontario, who lost more than $80,000 in separate bank investigator scams, were left stunned when their banks declined to refund their losses.
"I thought they were supposed to have fraud systems put in to protect us," Jodi Lang, one of the victims, told CTV News Toronto.
Historically, many people who were scammed have been able to recover their stolen funds from their banks. However, some banks are now taking a different stance, arguing that customers should have been more aware of potential scams and are refusing to provide refunds.
Duff Conacher, co-founder of Democracy Watch, believes the federal government should step in and do more to ensure banks act in the best interests of their customers.
"The banks set up the electronic banking system, and they haven't put in safeguards to prevent unusual transactions going through that system, and they always blame the customer," said Conacher.
He added that even if customers inadvertently allow fraudsters access to their accounts, Canadian banks should have the technology and security measures in place to detect and prevent fraud as it occurs.
"Usually very large amounts of money come out of accounts or on credit cards very quickly and that's the bank's fault," he said.
Canada’s finance minister Chrystia Freeland's office responded to the concerns by reiterating the government’s "zero tolerance" for scams.
In a statement, a spokesperson said that consumers who have complaints related to financial products or services are entitled to access their bank’s complaint-handling process.
Under the Financial Consumer Protection Framework introduced in 2022, banks must address complaints within 56 days. Customers who are not satisfied with the outcome can escalate their cases to an external complaint body.
"The federal government has designated an independent and transparent not-for-profit organization, the Ombudsman for Banking Services and Investments (OBSI), as the single external complaints body for Canada's banking sector," the statement read.
Starting November 1, Canadians who feel they have been treated unfairly by their bank will also be able to contact an impartial mediator.
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To further safeguard consumers, Conacher suggested that banks should implement systems allowing customers to set limits on withdrawals and receive immediate alerts for suspicious transactions.
For instance, he proposed allowing customers to set notifications for transactions over $1,000, a system that could help both customers and banks prevent fraudulent losses.
"What's incredible is that banks have not put that kind of system in place for unusual transactions on bank accounts, and they could easily do it," Conacher said.
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