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

When two women in Ontario lost over $80,000 in separate "bank investigator" scams, they assumed their banks would reimburse them, only to be stunned when the banks refused.

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

While many customers have typically been refunded after fraudulent withdrawals, several banks are now denying refunds, claiming that customers who fall for scams should have been more cautious.

Democracy Watch, a group co-founded by Duff Conacher in Ottawa, aims to hold governments and corporations accountable in such cases. Conacher argues that the federal government should require banks to prioritize the protection of their customers.

"The banks created the electronic banking system, but haven’t implemented safeguards to block suspicious transactions, and they always blame the customer," Conacher said.

Even when customers unknowingly allow fraudsters access to their accounts, Conacher believes Canada's major banks should have the technology, security, and algorithms in place to detect and prevent fraud in real time.

"Large sums of money are usually taken from accounts or credit cards very quickly, and that's on the banks," Conacher added.

A spokesperson from Finance Minister Chrystia Freeland's office emphasized in a statement that the government has "zero tolerance" for scams.

"Consumers who have complaints about the financial products and services provided by their banks are entitled to access the bank’s complaint handling process. The Financial Consumer Protection Framework, introduced in 2022, mandates banks to resolve consumer complaints within 56 days. If customers are not satisfied with the resolution, they can escalate their complaint to the bank's external complaint body, which will further investigate and make a determination," the statement reads.

Freeland also noted that starting November 1, 2024, Canadians who feel they have been treated unfairly by their bank can contact an impartial mediator to review their complaint.

Conacher suggested that to reduce fraud, banks should allow customers to set withdrawal limits and receive immediate alerts when significant amounts of money are withdrawn. For instance, customers could be notified of transactions over $1,000. He believes such a "red flag" system would safeguard both customers and banks from fraudulent activity.

"It's unbelievable that banks haven’t implemented systems like this to monitor unusual transactions, even though it would be easy for them to do," Conacher said.