EXPLAINER: Is the bank liable to refund if a client shares confidential details with kidnappers?

The National Financial Ombud Scheme explains what happens when a bank client’s money is withdrawn during a kidnapping Picture: Supplied

The National Financial Ombud Scheme explains what happens when a bank client’s money is withdrawn during a kidnapping Picture: Supplied

Published Aug 17, 2024

Share

The recent spike in kidnappings across the country has raised questions around what happens to the victim's money once he or she has withdrawn monies for suspects. Will the bank reimburse the victim? Is the victim liable?

According to the National Financial Ombud Scheme, it has received a number of complaints from kidnap victims who have had to divulge their confidential banking details to their abductors, under duress.

The NFO explained that each case must be assessed on its own merits, and the specific facts of the matter guide the findings.

The NFO's banking division lead ombudsman, Nerosha Meseti, explained that even if liability is attributed to the consumer, the bank may still consider the customer's personal circumstances and vulnerability and, in some cases, offer a partial refund as a gesture of goodwill.

In a recent case, Meseti said a complainant was kidnapped and forced to share his online banking details, resulting in unauthorised transactions totalling R103,092.

She said the transaction was flagged by the fraud monitoring system and the bank contacted the client.

"He confirmed the transaction, under duress, and once released, reported the matter to the bank. His request for a full refund was rejected and the bank said the client had shared his confidential banking information," Maseti explained.

She said the NFO's investigation considered the contract between the client and the bank.

Once all the merits of the case has been thoroughly investigated, the bank was not found negligent in mitigating the complainant's loss.

"Given the merits of this matter, there were no legal grounds on which we could hold the bank liable for the complainant's loss. The complainant was essentially a victim of a crime in which the bank was not involved. However, the bank agreed to refund a portion of the loss as a gesture of goodwill, based on its commercial discretion," Maseti said.

She said each case has to be assessed on its own merits and the specific facts of the matter guide the NFO's findings.

She added that when a banking customer compromises their confidential banking details, they are usually held liable.

"However, liability shifts to the bank once the compromise is reported. When notified, the bank has a duty to mitigate any losses. Banks have the difficult task of confirming the alleged criminal claims and that the confidential information was, in fact, disclosed under duress," Maseti said.

Maseti warned consumers to remain vigilant and take proactive protective measures.

"If you fall victim report the incident to the police and relevant law enforcement agencies," she said.

Six tips for prevention and mitigation:

Watch what you post online: Avoid posting sensitive financial information or sudden changes on social media. It is extremely important to be vigilant about what information you share on social media and the perceptions you create about yourself, your family, and your friends. Avoid posting about sudden influxes of funds, as this can make you a target for criminals.

Don't draw unnecessary attention to yourself: Wearing expensive jewellery, carrying high-end branded items, or carrying other valuables in public may attract unwanted attention.

Switch up your daily routine: Diversify your daily activities to reduce predictability. Criminals may monitor predictable routines well before the actual crime is perpetrated in order to ensure that they are vulnerable to criminal targeting.

Speak to your bank: Discuss the measures your bank may offer to help mitigate potential losses if you become a victim of any type of banking fraud. Many banks provide options to tailor your online banking and app experience, including limiting your exposure and risk.

Look at investment options: Use accounts with restricted access to limit potential losses. In some instances, investing in a notice account may reduce access to your funds, thereby limiting your overall loss.

Insurance: Check if your bank offers duress insurance or trauma counselling services. These may help in tough situations.

IOL News