Calls for more protections for Canadian bank clients amid rise in scams

Canadians falling victim to bank investigator scam Canadians have lost more than $6 million to bank investigator scams in 2024, which has sparked calls for banks to do more to protect clients

When two Ontario women were scammed out of more than $80,000 in separate bank investigator scams, they thought they would be reimbursed by their banks and were shocked when they weren't.

"I thought they were supposed to have fraud systems put in to protect us," Jodi Lang told CTV News Toronto after losing thousands to the scam.

Most people typically have gotten their money back after it was stolen from their bank account, but now several banks refuse refunds, saying customers who have been "scammed" should have known better.

Democracy Watch, a group co-founded by Duff Conacher in Ottawa, states its goal is to hold governments and corporations more accountable during these situations.

Conacher said the federal government should do more to force banks to look out for bank customers' best interests.

"The banks set up the electronic banking system, and they haven't put in safeguards to prevent unusual transactions going through that system, and they always blame the customer," Conacher said.

Even if a customer gets hacked and is at fault for allowing fraudsters into their bank accounts, Conacher said Canada's big banks should have the technology, security and algorithms to detect fraud as it is happening and shut it down.

"Usually very large amounts of money come out of accounts or on credit cards very quickly and that's the bank's fault," said Conacher.

A spokesperson from Canada's Finance Minister Chrystia Freeland's office told CTV News Toronto in a statement that the government has "zero tolerance" for scams.

"Consumers who have complaints related to the financial products and services provided by their banks are entitled to access their bank's complaint handling process. The Financial Consumer Protection Framework, introduced in 2022, requires banks to address consumer complaints within 56 days of submission. Consumers unsatisfied with the resolution offered by their banks may escalate their complaint to their bank's external complaint body, which will further investigate and make a determination on the merits of the complaint," the statement reads.

"The federal government has designated an independent and transparent not-for-profit organization, the Ombudsman for Banking Services and Investments (OBSI), as the single external complaints body for Canada's banking sector."

As of Nov. 1, 2024, Freeland says any Canadian who feels they have been treated unfairly by their bank can contact an impartial mediator to handle their complaint.

Conacher said to prevent fraud, banks should allow customers to set limits on withdrawals so they can be notified immediately if money is being taken from their account.

For example, a customer could set an alert for transactions over $1,000. Conacher said a system with "red flags" such as this would protect both customers and banks from fraudulent losses.

"What's incredible is that banks have not put that kind of system in place for unusual transactions on bank accounts and they could easily do it," said Conacher.