A customer transferred money to a fake landlord

Fraud and scams Banking

Chantelle was searching for a studio flat using a free classified advert website. She found a flat that she liked and contacted the person she thought was the landlord.

What happened?

Chantelle went to view the flat and signed a contract which all appeared to be genuine. After several email exchanges with the person who had claimed to be the landlord she agreed to rent the flat. She paid 6 weeks’ deposit and one month’s rent to secure the flat.

When Chantelle made the payments this triggered the bank’s fraud systems and her bank called her to verify the payments were genuine. When she explained to the bank that she was paying a deposit and rent to a landlord it explained there were scams in existence and she should be careful when proceeding. Chantelle said she had been to see the flat and had a contract from the landlord so had no reason to believe anything was wrong and so wanted to proceed with the payment which the bank agreed to – in accordance with the mandate on the account.

On moving day (4 weeks later) Chantelle turned up at the flat and the genuine landlord was there. He said the previous tenant had advertised the flat without permission and pretended to be landlord. He had keys to the flat so was able to show people around and had been able to make a fake contract. He had done this to several other people and taken their money in a similar way.

What we said

The bank had picked up the transaction through its fraud systems and made contact with Chantelle before completing the transaction and we thought this was good practice. When speaking with Chantelle we thought it listened to what she was saying and gave her warnings about relevant scams. It was reassured by Chantelle’s responses and completed the transaction in line with her instructions and the mandate on the account.

The chain of events here were extremely unfortunate and we were sympathetic to Chantelle’s circumstances. But we felt here that the bank had followed good industry practice and we didn’t think it could have or ought to have known she was the victim of a scam. We felt the advice and warnings it gave to Chantelle before she made the payment were clear and it couldn’t have done anything else to prevent the scam.

Chantelle’s bank made contact with the receiving bank as soon as they were notified of the scam. But by that time, the money had already left the scammer’s account and there was nothing more Chantelle’s bank could have reasonably done to stop that, or to recover the funds.

We concluded that whilst Chantelle had been the innocent victim of a cruel scam, we didn’t think it was fair to ask the bank to refund the money she had transferred in these circumstances.