Emily and Jasper contacted a car dealer to buy an overseas luxury car. The car dealer would find a supplier, negotiate a price and arrange for its delivery to their home. However, Emily and Jasper would need to pay the overseas supplier directly, using a foreign exchange company.
The car dealer made a new contact with a supplier, Jethro, from the United Kingdom. Jethro had an Audi car for Emily and Jasper. The car was going to cost GBP29,750 (around $50,000).
To make it easy for the couple, Jethro put them in touch with a contact, who was an employee at a foreign exchange company. When Jethro was ready to ship the car, the foreign exchange company employee set up the payment for Emily and Jasper to transfer the GBP to the car dealer, and contacted Emily for permission to transmit the money.
Soon after, Emily and Jasper realised there was no car and they had lost $50,000. Emily and Jasper found out that Jethro was in fact, Chan, an elite fraudster from Asia. Chan was long gone before the car dealer and the couple realised what had occurred.
Unfortunately, the foreign exchange company did not pick up on the fraud before transacting the money. Chan had somehow managed to gain a preferred members account with the foreign exchange company. Several anomalies in the receiver’s name and bank code had been overlooked.
Emily and Jasper complained to FSCL about the foreign exchange company. They sought to recover the cost of the car.
Review
We started our investigation looking, in particular, at the foreign exchange company’s employee’s role in the fraudulent transaction.
It appeared that the foreign exchange company had not taken any steps to verify that the location to which the payment was being sent was legitimate. The employee had also failed to notice inconsistencies in the payment receiver’s details. The foreign exchange company’s suspicion ought to have been raised that Emily and Jasper had fallen victim to a fraud.
Outcome
A representative for three other parties similarly affected also contacted us. These parties had started court action against the car dealer and were looking to hold a mediation between the affected parties, the car dealer and the foreign exchange company.
Although we were concerned the parties would incur considerable legal costs instead of using our free service. However, as we did not have jurisdiction over the car dealer, we agreed with the representative that a joint approach at mediation was a sensible first step in the circumstances.
On that basis we closed our investigation. We reminded Emily and Jasper of their right to continue with their complaint about the foreign exchange company if the mediation did not resolve their complaint.
Key insights for the participant and the complainant
When transacting money, especially large amounts, overseas, consumers should be very careful to ensure they are not being scammed. While foreign exchange companies have security measures in place to prevent fraud, mistakes can occur. Consumers should always complete their due diligence before transmitting large sums of money to unknown persons overseas.
Consumers should be aware that FSCL will generally not reimburse their legal costs incurred in pursuing their complaint as FSCL is a free dispute resolution process for the public. We are an alternative to the court process for claims of less than $200,000.
