A "friend" took advantage of an elderly woman

An 82-year-old woman received a letter from her friend in which the friend admitted she took $1,940 from the client's bank account before leaving the country. The client immediately informed both the police and her bank.

After going through her finances with the help of her niece, the client discovered that the first fraudulent activity involved an $8,000 cheque written on her account with a credit card cheque three years prior. Her credit card statement showed the transaction, but the elderly client misread it and didn't see the emerging fraud problem. Over a period of three years, the friend had "borrowed" approximately $75,000 through the client's credit card account through the use of cheques and cash advances. Although her friend made repayments, about $63,000 in cheques written by the friend bounced. The client claimed she was victim of a fraud and asked the bank to forgive the debt on her account.

The bank acknowledged that the client's friend was later convicted on several charges of fraud relating to the client's account. However, in the bank's view the client was not completely unaware of the outstanding debt. The bank cited a telephone conversation in which the client had asked about the disputed charges. She told the bank that she had given her card number to her friend to use in case of emergencies. She had also given her friend her telephone banking password to make certain transactions on her behalf.

Since the client had given her friend her telephone banking password, the bank said it was reasonable to assume that the client's credit card personal identification number (PIN) had also been disclosed by the client. The bank concluded that the client was responsible for the losses but was prepared to accept partial repayment for the outstanding card balance provided the client submitted a statement of her financial affairs. The client did not agree to the proposed settlement terms.

Our investigation confirmed that the PIN number was correctly entered to make the cash advances with the client's card and then the card was returned to the client. The signatures on the cheques appeared to be that of the client. The client had accepted her friend's transactions on her account for two years and we didn't believe it was reasonable to dispute them a year later when the fraud on her account came to light. The client's friend gradually increased her use of the client's card and we did not see a sudden change in the pattern of account activity which would have alerted the bank to the friend's unauthorized use of the client's card. The client's pattern of behaviour toward her friend indicated that she trusted her completely and left herself open to the fraud by willingly sharing her card and PIN.

We concluded that the client did not exercise proper care and control over her card, PIN and other financial information which directly contributed to the fraud loss. We did not recommend compensation for the client.

(2009)