Citi Bank to Refund $48,000 After Customer is Scammed, Says AFCA
AFCA has ruled in favor of the complainant in a case against Citi Bank, where a customer lost $48,000 in a scam incident. While the bank was not found to be at fault initially, it was determined that they did not fulfill their chargeback obligations. As a result, the bank is required to provide compensation to the customer.
Complaint
The complainant held a credit card with Citigroup Pty Limited. On April 25th 2020, the complainant made three card transactions totalling $48,973.71 AUD as a result of a scam email. The email appeared to be from a legitimate company the complainant had previously dealt with and asked him to click a link to make a payment to renew his subscription.
Instead of making one payment of $14.85 to the legitimate company, the complainant unknowingly made three payments of $16,324.57 ($10,000 USD) to a third-party scam merchant. He said it appeared the transaction had not been successful, so he attempted to make the payment twice more.
On April 27th 2020, the complainant reported the disputed transactions to the bank. The complainant requested the bank complete chargebacks as he did not authorise the disputed transactions.
The bank raised chargebacks for each of the disputed transactions. Ultimately, the bank accepted the merchant’s response that no chargeback right existed because each of the disputed transactions was verified by the use of a one-time password (OTP).
AFCA’s Findings
AFCA found that the bank did not make an error when it processed the disputed transactions as the bank was not on notice of a real or serious possibility that the complainant may have been defrauded prior to the disputed transactions occurring. It also did not have an obligation to investigate the legitimacy of the disputed transactions before they were processed.
However, AFCA determined that the bank should have done more to pursue a chargeback to arbitration and that the bank has not complied with its chargeback obligations. By failing to pursue the chargebacks appropriately the complainant had not been fairly compensated for the disputed transactions.
Determination
The determination was in favour of the complainant with the financial firm being required to pay the complainant compensation.
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