Senior falls victim to the grandparent scam

Key lessons

• Bank staff are aware of the tactics commonly used by scammers and will do their best to warn customers when they suspect fraud is taking place. If your bank warns you about a transaction you are trying to complete, have an open mind and take their warnings seriously.
• The bank is not responsible for losses that result from a consumers’ own actions.

An elderly woman, Ms. W, had a grandson living overseas.

In September, Ms. W received a phone call from her grandson, who had been teaching English in South Korea. He indicated that he wished to move to China to continue teaching, and requested financial assistance from his grandmother for the move. As she was close with her grandson and helped raised him after the death of his mother, Ms. W wanted to help. Through her local bank branch, Ms. W sent a wire transfer to her grandson for $35,000.

In October the grandson phoned again, telling Ms. W he had been in a car accident, arrested for drunk driving, and needed bail money to get out of jail. In a later call he told her he needed additional money for legal counsel. Concerned for his safety and well-being, Ms. W wired additional money to China. Combined with the original transfer, Ms. W sent $123,000 to her grandson.

At Christmas, Ms. W's grandson came to visit. When asked about his troubles, the grandson said he had not relocated to China, had not been in an accident, had not been in jail, and had not called asking for money. Ms. W realized she had been the victim of a fraudster. She immediately notified her bank, but the criminals had disappeared and the bank was unable to retrieve any of the money.

Ms. W complained to her bank that they did not properly inform her of the risks associated with the wire transfers, and demanded compensation for her losses.

The bank declined. It explained that bank staff had cautioned Ms. W about the possibility of fraud and even offered ways to mitigate the risks on numerous occasions, to no avail. Unsatisfied, Ms. W brought her complaint to OBSI.

Complaint not upheld

During our investigation, we interviewed bank staff who recalled raising a number of concerns with Ms. W.

Ms. W had instructed the bank to prepare wire transfers to recipients other than her grandson. She had told bank staff that her grandson could not travel to a bank and that the money would instead be delivered by a friend. Bank employees were wary of this story and explained to Ms. W that fraudsters often employed such tactics. They suggested that Ms. W, at a minimum, include her grandson's name in the payment order or send the funds to him “in trust". However, Ms. W declined to take these precautions.

Each time Ms. W went to her bank to make another transfer, branch staff asked if Ms. W had confirmed that her grandson received the money. They also repeatedly warned of the possibility of fraud. Each time, Ms. W indicated her grandson had received the money.

Our investigation concluded that the bank acted appropriately. It had warned Ms. W multiple times that sending the money via wire transfer as she had instructed would leave her vulnerable to fraud. The bank also provided advice on how Ms. W could mitigate the risk, advice that was ignored. OBSI did not recommend the bank compensate Ms. W for her losses.