KEY POINTS:
The 774 cases received by the Banking Ombudsman this year ranged from internet banking fraud and money laundering scams, through to credit cards that fail to function overseas and early repayment costs on fixed interest loans.
The Ombudsman has been surprised by a rise in complaints relating to cheques.
A decline in the use of cheques has seen an accompanying decline in customer understanding of how to protect against cheque fraud.
Below are a couple of examples:
CHEQUE MATE:
Mrs L wrote out a cheque for $20,000. She crossed the cheque with two parallel lines, but did not cross out the words "or bearer" or write anything between the lines.
She posted her cheque to the intended recipient - an investment company.
Unfortunately the letter containing the cheque, along with a number of other letters, was stolen from NZ Post.
The thief wrote another customer's name over the top of the original payee's and deposited the cheque into that customer's account.
When Mrs L discovered the her cheque had been paid to someone other than the intended recipient she complained to the bank and the Police.
The bank said it had accepted the cheque in good faith and there was nothing to alert it to the fact the cheque was stolen.
Mrs L then contacted the Banking Ombudsman.
Because Mrs L hadn't crossed out the words "or bearer" the cheque was what is known as a bearer cheque.
This means the money can be deposited into the account of the payee named on the cheque or the person in possession of the cheque.
By crossing the corner of the cheque Mrs L did not prevent the cheque being paid into the account of someone other than the original payee. It only meant the cheque couldn't be cashed.
To protect against a cheque being paid into an account of anyone other than the intended recipient, Mrs L needed to have cross out the words "or bearer" and written the "not transferable" or "A/C payee only" between the parallel lines.
PHONEY CALL:
The Ombudsman received a complaint from the son of an 86-year-old man, who although mentally competent, had granted his son power of attorney.
The elderly man had been unknowingly caught up in an international scam and had agreed to send $20,000 to a US bank account.
Much of the promised money had already been sent when the son discovered what his father had been up to.
The son checked the US organisation on the web and warned his father he was being scammed.
The father called the bank and said "my children tell me this is a scam. Is it?"
The bank did not caution him in any way and even provided him with the contact number for the US organisation.
When the father called the US number he was assured he was not part of a scam, and went on to authorise the transfer of a further $9,000.
The shocked son complained to the bank about not cautioning his father, at which point the bank accepted partial responsibility and agreed to reimburse 50 per cent of the $9,000. The case was settled on the day the Ombudsman was notified.
HOLIDAY HELL:
Ms B planned the trip of a lifetime, travelling to the USA via a stopover in Tahiti.
She arranged travel insurance through her bank and sought its advice on a foreign exchange package that would work in both locations.
With insufficient time to arrange a credit card, Ms B chose from the remaining options prepared for her by the bank - a mix of cash in U.S dollars and a debit card that would work in Tahiti and North America.
However, her dream holiday was ruined when she was unable to use her debit card in Tahiti to settle the hotel bill.
She said she trawled for cash from about 16 ATM machines in downtown Papeete, but not one delivered the necessary money.
The hotel retained her passport and insisted she remain in Tahiti until its claim had been met. Fortunately, her bank in New Zealand made an urgent telex transfer to cover the hotel costs and Ms B left on her planned flight to New York.
When she arrived in New York she found her debit card worked fine and had no further problems with currency. However, the Tahiti incident had been so upsetting she decided to cut her holiday short.
On return to New Zealand complained to the bank about the extra expense, stress and inconvenience that came from being cashless in Tahiti.
The bank responded with a goodwill offer of $650 but denied responsibility for her experience in Tahiti.
The Banking Ombudsman intervened and recommended the bank reimburse Ms B her expenses in obtaining the telex transfer and pay $1,500 in compensation for the incovenience and distress she suffered.
DIRTY LAUNDRY:
Miss Z, a university student, answered an advertisement which she received by email. The advertisement offered her the opportunity to earn $800 or more per week.
Miss Z responded to the email and went on to sign an elaborate and impressive looking employment contract as a "financial manager" providing "transaction services" for a German company purporting to be called Troy Communications Gmbh.
Miss Z had unwittingly been ensnared in a classic "mule" scam where individuals agree to facilitate the international transfer of stolen money.
The Troy set up was more sophisticated than other mule cases the Banking Ombudsman had seen in the past, with Miss Z even receiving telephone calls from a recruitment team and a company representative called Adolf.
Miss Z was asked to log on to the Troy website and had 24 hour one-to-one contact with a woman answering to the name of "Magda", whose photo was displayed on the panel.
It was explained that her work would consist of receiving funds from Troy customers based in New Zealand into her personal bank account and then transferring them to other Troy clients using an international money order.
Her commission would be 5 per cent of the funds transferred.
The sum of $2,988 was paid into Miss Z's account from another New Zealand bank account early in the morning of 29 March 2006. Following the directions given by Adolf, she immediately transferred the funds to a recipient in Russia by international money order.
Adolf called her before and after she had authorised the money order, confirming the reference details of the money order.
During the afternoon of the same day Miss Z was advised by her bank that the funds transferred to her account had been reported as stolen, as it turned out, too late for her to block payment of the money orderl.
To add to Miss Z's misfortune, her bank then reversed the transaction from her account, leaving it overdrawn by the amount of $2,988.
It seems for these scams to be successful the mule must be encouraged to transfer the funds out of the country with maximum speed.
When Miss Z requested her bank to repay the $2,988 which, in her view, had been unjustly withdrawn from her account, it declined to do so.
The Banking Ombudsman investigator contacted Miss Z's bank, which examined her file and quickly established the funds transferred to her account had been clearly flagged as cleared funds.
Because the transfer had been designated as cleared, the bank had acted incorrectly in reversing the transaction in question.
If the transfer had not been designated as cleared, it would have been a very different story.
Miss Z's bank agreed to refund the $2,988, and also added $200 in compensation as a customer service gesture.
MORTGAGE SHOCK:
Ms T and her partner received a very good offer to sell their home.
Before accepting the offer they met with their banking consultant to see how much they could afford to borrow to buy a new house.
They were told by the bank they could afford to buy a property worth up to $350,000 with the 10 per cent deposit they had and their loan repayments would be $656 a fortnight.
They then accepted the offer on their existing home and entered into a contract to buy a new property for $310,000.
To Ms T's dismay, when she and her partner went in to sign the bank loan documents, they were told that in fact their repayments were $1,005 per fortnight.
When she complained, the bank offered to give Ms T a discount of 0.3 per cent on their 5 year fixed-interest rate, reducing the fortnightly loan repayments to $945.
Ms T was not happy with the banks offer and complained to the Banking Ombudsman.
After further discussion and negotiation between Ms T, the Ombudsman investigator and the bank, an agreement was reached.
The bank would allow Ms T to retain her capped rate loan of $150,000 that expired in June 2006 and would advance the additional money she required to buy her new home ($130,000) for a period of six months on an interest-free basis.
The bank also agreed to pay contributions of $1,200 to Ms T's legal costs, $500 towards valuation costs on the house and an exgratia payment of $2,000 for the stress and inconvenience caused to Ms T and her partner as a result of the bank's mistake.
WHAT IS THE BANKING OMBUDSMAN?
The Banking Ombudsman scheme was set up in 1992 as a free, external and independent process to help people sort out their unresolved problems with banks.
The Banking Ombudsman operates independently of the major banks and the Government
WHAT KIND OF COMPLAINTS DO THEY HANDLE?
The Banking Ombudsman will investigate complaints about banking services and advice.
The investigation is undertaken free-of-charge and is an informal alternative to going to court. In most cases you should not need any financial or legal expertise.
How can I make a complaint?
In the first instance you must contact the bank concerned and request a review of your complaint by the bank through its internal complaints procedures.
If you are not happy with the bank's decision, contact the Banking Ombudsman for assistance.
Contact the Banking Ombudsman
