Financial Ombudsman Service, Financial Services Complaints Limited (FSCL), has had a record-breaking year for financial services disputes. FSCL investigated 532 disputes in the 2025/26 reporting year, the highest number in its history, and a 49 percent increase on the year before. The recently published Annual Report also highlights an increase in sophisticated scams and fraud complaints received by FSCL.
One case example involved a consumer who lost $4,800 after fraudsters used his credit card details and a one-time passcode to add his card to a digital wallet.
Convincing scams involving fake apps, professional-looking websites, and persuasive communication are robbing millions from unsuspecting New Zealanders every year.
A man, Tom*, clicked a link in a text message that appeared to be from NZ Transport Agency Waka Kotahi about an unpaid toll. He entered his credit card details and a one-time passcode. Unbeknown to him, his card was added to a Google Pay wallet. Nine days later, three purchases totalling $4,800 were made at three stores using the wallet.
Tom disputed the transactions with his credit card provider, saying he had not authorised the purchases. His card provider declined to refund him because the card had been added to the digital wallet using the correct authentication process, including the one-time passcode. Tom took his complaint to FSCL.
Financial Ombudsman Susan Taylor said, “We accepted Tom was the victim of a scam. But the card provider’s terms and conditions required customers to protect their card details and one-time passcodes and treated the use of a one-time passcode as authorisation.
“While Tom did not intend for his card to be added to a digital wallet, the terms and conditions still applied. There was also a gap of more than nine days between the card being added to the wallet and the disputed transactions taking place.
“A one-time passcode can also be used to approve actions such as adding your card to a digital wallet. Never share or enter a passcode unless you are certain the request is legitimate. If in doubt, contact your card provider.”
FSCL found the card provider had not been aware the card details had been compromised before the transactions occurred and had acted promptly once suspicious activity was detected.
The card provider said a chargeback was not available because the purchases had been made through a digital wallet after the goods had already been supplied by merchants who had no way of knowing the card details had been compromised.
In the circumstances, FSCL considered it reasonable for the card provider not to provide a refund for the transactions. As a gesture of goodwill, the card provider refunded $207 in interest charges. FSCL considered the card provider’s offer was fair.
Ms Taylor said, “If you think you may have entered your card details or a one-time passcode on a scam website, contact your card provider immediately. Acting quickly may allow the card provider to cancel the card or take steps to prevent any loss.”
To find out more, read our 2025/26 Annual Report here.
ENDS
Notes to Editor
*Names have been changed for privacy
