Banks blame fraud victims for their loss

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Law professor says financial institutions must do more to protect customers.

Last December, Ivy Hotchkiss December became the victim of an elaborate online job scam.

Hotchkiss said “I sat on the floor in shock and disbelief,” and “Just clutching my computer, thinking, ‘What am I going to do?'”

The 22-year-old Toronto student had spent weeks looking online for part-time work, to help cover expenses in her final year at college.

“I had applied to every Tim Horton’s, every McDonald’s,” Hotchkiss told Go Public.

She finally believed she secured a job working from home as a data entry clerk for Aritzia — a trendy women’s clothing chain, based in Vancouver.

“They offered me $30 an hour, which I thought was amazing,” she said. “I immediately said yes.”

Her new employer sent a cheque for $3,485 with the specific instructions to e-transfer those funds to an office supply company to purchase needed equipment.

She deposited the cheque and waited 48 hours to make sure the money remained in her account and then sent the e-transfer.

Even though she waited sometime before sending the e-transfer, within two days, the cheque bounced. She had lost the money in an elaborate scam involving a fake Aritzia website, fake employment contract, fake managers, a fake office furniture company and — most devastating — a fake cheque. 

“That was going to be my food and rent for the next month,” said Hotchkiss. “It was the most panicked feeling I’ve ever felt.”

TD Bank told Hotchkiss that she was to blame, because she’d deposited a counterfeit cheque.

After Go Public made inquiries, TD offered to reimburse her as a one-time “goodwill gesture.”

Hotchkiss is one of a growing number of people hoodwinked by a pandemic-fuelled explosion in job scams, according to the Canadian Anti-Fraud Centre (CAFC).

Between January-September 2021, the CAFC received reports from almost 1,400 victims who lost just over $8 million — almost double the losses reported in 2020.

A professor of consumer protection law at Ryerson University in Toronto, Daniel Tsai, says financial institutions need to do more to protect customers from falling prey to fake cheques, particularly in this turbulent job market.

Tsai said “for banks to protect customers from fraud takes resources, time and money” and “it seems they’d rather be spending that to sell GICs, mortgages and basically increasing their bottom lines.”

The scammers had told Hotchkiss to order equipment from Tech Insight Services — the same phoney company involved in a similar scam reported by Go Public last year.

Hotchkiss claims she fell victim to the scam because TD accepted the cheque and her balance remained high for two days, before she sent the e-transfer.

“I’m frustrated that the bank allowed the money to appear as if it was there,” said Hotchkiss. “It’s totally misleading.”

Hotchkiss subsequently filed a police report and a complaint with TD, but the bank said she was responsible and the money had already been accepted by fraudsters.

Then TD suggested that it put a security measure on her account, preventing access to funds from future cheques until they have been verified. 

Hotchkiss expressed her frustration about why she hadn’t been offered this protection before.

“It should be standard for all the Canadian banks to delay deposits until they can be proven they’re legitimate cheques,” she said. “It would prevent this scam from happening to anyone else.”

Go Public asked TD why it doesn’t give customers that option.

TD didn’t address that question, but in an email, a spokesperson included a link to the bank’s hold funds policy, which explains that, when a cheque is deposited, the bank is essentially offering credit until the cheque clears.

If the cheque eventually bounces, the customer owes the money to the bank — similar to policies at all of Canada’s big banks.

“Bank account agreements are so pro-bank that they absolve the banks of any liability,” said Tsai.

“They usually have clauses in there to ensure that they are not responsible for the customer losing funds due to fraud.”

It would not be difficult for financial institutions to let customers know that cheques can take days or even weeks to clear, by sending out texts and emails.

“They do it to sell us mortgages, loans and investments,” said Tsai. “They can surely do this to protect their customers who have worked hard for their money.”

Bank said money was in account

Henrietta Fleischer fell victim to a similar scam because an employee at her bank said the money was in her account.

The Toronto mother of four had just returned to Canada from Ghana last year and was searching for a second job to support her family. She believed she’d been hired as a data entry clerk by the transportation company Ryder.

But before e-transferring $3,475 for non-existent office furniture, Fleischer called Simplii Financial (an online subsidiary of CIBC) to make sure the money was actually in her account.

She was told it was. 

“I wouldn’t have gone ahead with the transfer if I knew the money wasn’t in the account,” she said. 

Simplii insisted Fleischer was at fault for depositing a fraudulent cheque.

“After every call with the bank, I’d just be shedding tears,” she said. “I’m like, ‘Oh my god, don’t let these people tell me I’ve lost it [the money].'”

After she wrote several letters and filed a complaint with the bank’s ombudsman, Simplii gave the money back — with no explanation or apology. 

A spokesperson from Go Public said: “Protecting our clients from fraud is important to us and we advise clients to be cautious when accessing funds until cheques are cleared.”

Banks should enhance efforts’

The Better Business Bureau released a report on job scams, saying banks should do more to warn customers about fake cheque scams.

Job scams, along with several other virtual scams, have been growing since 2017 — targeting people across North America between ages 25-34.

Simone Lis, president and CEO of the Better Business Bureau of Mainland B.C. said “the estimated losses [over the past four years] is $2 billion,” and “in the bank’s desire to provide a service and get money to consumers as quickly as they want, it’s created this opportunity for scammers.”

Financial institutions must “play a greater role in educating and saying, ‘No, that money is not there,'” she said. 

Hotchkiss graduated last spring and, this time, used an employment agency to find work — full-time at an automotive assembly plant in Guelph, Ont.

“It’s turning out to be a wonderful job,” she said. Still, she says, she’ll never forget the heartbreak of losing all her savings to scammers.

“I really hope that all of the banks change their systems,” said Hotchkiss.

“Cheques must be looked at and confirmed that they are legitimate before the money is deposited and accessible in customers’ accounts.”

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