Online scams are increasingly prevalent and expose vulnerable members of our community – particularly the elderly – to significant risk of loss. Despite public awareness improving, scams are becoming progressively more sophisticated and targeted to those most vulnerable to their tactics.
Romance scams are a particularly egregious form of online trickery where scammers enter into fake relationships with people online, who are encouraged to pay often substantial sums of money for a variety of their love interest’s expenses (such as migration costs, plane tickets etc).
Transactions are usually carried out by online banking transfers. A query therefore arises as to what liability, if any, a bank might have for their customer’s losses in scam transactions.
A customer of ANZ Bank attempted to take the bank to task for their perceived failures to help him recover his losses against the Russian romance scammers who targeted him. In Williams v ANZ Banking Group Ltd [2026] VSC 6, Michael Williams alleged that he had lost over $25,000.00 to the scammers in a 3-year period, and the bank had failed to properly investigate the scam or reimburse him after they were notified of the losses.
Mr Williams argued that ANZ were liable to compensate him for his losses and owed him both a duty of care to investigate the scam and protect him, and fiduciary duties, which they breached.
ANZ, in response, sought to strike out Mr Williams’ claim, on the basis that Mr Williams had authorised the transactions (which he later realised were a scam), that there was no legal cause of action and there was no fiduciary relationship between a bank and its customer.
Fiduciary duties
A fiduciary duty is the legal and ethical obligation of one party (the fiduciary) to act in the best interest of another. It is an obligation of trust and confidence. It is not hard to understand why Mr Williams may have expected his bank to have such duties to him.
Common examples of fiduciary relationships are trustee to beneficiary and attorney to principal under power of attorney. Breach of duties by those fiduciaries carries stringent liability and consequences.
A bank, however, is different. Justice Forbes was not satisfied that a fiduciary duty had arisen between Mr Williams and ANZ simply because Mr Williams had personal trust in the bank. Fiduciary duties between banks and customers arise in limited circumstances; for example, holding money for a specific purpose or providing investment advice, but the mere issuing of a Visa debit card was not sufficient to create this special relationship.
Elder abuse and scams
Families who discover their loved ones have fallen victim to online scams are often distressed and want to take urgent action, including notifying the bank and requesting that the accounts be frozen to stop further losses.
However, banks are often hamstrung in what they can do when their customer does not realise (or accept) that they’re being scammed.
Where the victim is a person with impaired cognitive ability (including an older person), action may be able to be taken by someone with a valid power of attorney who is empowered to act under the document.
An attorney may be able to contact the bank to stop future transactions and request investigation and documents to recover losses.
Difficulty can arise where either there is no attorney appointed or that attorney cannot act (for example, if they are appointed to act when a person loses decision-making capacity and the person is refusing to undergo medical assessment). In that instance, the attorney might consider applying to VCAT for advice and/or an urgent order that would empower someone to act to mitigate risk of serious harm whilst capacity is assessed. Acting swiftly and with proper advice is key.
However, no perceived hurdle should prevent a concerned loved one from reporting their concerns to the financial institution. Whilst they may not be obliged to assist, it does not prevent a financial institution from taking some steps to try and protect their customer.
Suzanne Lyttleton Lawyers have extensive expertise in assisting attorneys or family members of vulnerable persons who may be at risk of exploitation or fraud.
If this is something you require assistance with, please contact our team on 9646 4477.
