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Issue 26 - August 2016

Case study: A phone scam targeting older people

 

The applicant was a 69-year-old aged pensioner, living with her husband, aged 75, in a rural area. She received a message on her answering machine from a person saying they were from the Australian Taxation Office (ATO) instructing her to call back immediately. The message said the police had an arrest warrant which would be served on her within the next few hours for tax avoidance, which could result in her being jailed for 36 hours, and not to ignore the call. She returned the call and was told she had to withdraw $5,000 from her account and deposit it into another bank account (with the FSP). She said it was all quite frightening and very plausible so she complied with the instructions.

She immediately began to have real doubts about the whole thing and her husband then found an item on the internet about the ATO scam. She straightaway rang the FSP, who she says were very helpful. The FSP said the money was still in the account and they put a hold on the account.

Unfortunately, the FSP was then put in a difficult position because the account holder (who had received the $5,000 into his account) claimed that he was entitled to the funds and denied any association with the scam activity. The applicant was referred to FOS by the local police after they had exhausted all avenues within their powers of resolving it.

The FSP said:

  • it had declined to return the funds to the applicant because it did not know who the true owner of the funds were and were of the view that it was a civil matter
  • the funds were transferred into the account with the FSP genuinely and they could not merely withdraw the funds from the account and pay the amount to the applicant.

FOS investigated the dispute and was satisfied that the applicant had established that she paid $5,000 into the FSP account in the mistaken belief that she was under a legal obligation to make the payment to the ATO. We found that she formed this view based on a misrepresentation made to her by the person who called her. We accepted that the payment would not have been made, but for the mistake.

We also had to consider whether the person who received the payment had any defence he could make to the applicant’s claims. We found that he had not established that the applicant owed him the funds, or that she intended to pay him the funds in any event. There was no information to show that there was any debt owed to him by the applicant.

FOS found that the FSP should refund to the applicant the $5,000 she deposited because she had established that the payment was made by mistake. The fact that the applicant had taken immediate steps to contact the FSP, reported the incident to the local police and kept detailed and consistent records of her version of the events, meant that FOS was able to find her claim had been established on the balance of probabilities.

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