Call us: 0800 347 257

Fraud on a vulnerable consumer’s account – who’s to blame?

Aesha who is disabled, receives assistance with her finances from a local charity group. She does her banking with a credit union and due to her disability, her account has a ‘two-to-sign’ security measure.

In order to make a withdrawal, Aesha’s caregiver would have a withdrawal slip signed by a senior employee at the charity and then escort Aesha to a branch. Aesha would countersign the withdrawal slip at the branch in front of a teller, and the cash would be handed over.

On one occasion, the teller noticed that Aesha’s withdrawal slip had been altered so she didn’t process the withdrawal. The teller told her manager who contacted a senior staff member at the charity.

After an investigation it was found that Aesha’s caregiver had been altering the withdrawal slips before arriving at the branch with Aesha. The caregiver had been increasing the withdrawal amounts on the slips and keeping the extra money for herself. The caregiver had also been using fraudulent transfer slips to transfer money to Aesha’s second account, and then withdrawing that money using Aesha’s EFTPOS card.

Aesha’s caregiver took more than $10,000 fraudulently. The charity referred the matter to the police and reimbursed Aesha for all the money that was taken, but they asked the credit union to cover some of the loss.

When the credit union refused to reimburse any of the money, the charity complained to FSCL on Aesha’s behalf.



The credit union didn’t think they were responsible for the fraudulent withdrawals. They argued that the ‘two-to-sign’ security measure on Aesha’s account wasn’t valid and said that Aesha signing the withdrawal slips in front of their tellers was sufficient to allow them to hand over the money. They also thought that either the charity or Aesha’s family should have noticed the large withdrawals on the account statements that were sent out regularly.

The credit union didn’t want us to investigate because they thought the caregiver may be ordered to reimburse Aesha as a result of the police investigation.

The charity thought that the credit union were partially responsible for allowing the fraudulent withdrawals because the withdrawal slips given to the tellers were obviously altered.

The charity also said that there should have been a $100 withdrawal limit on Aesha’s account, and that the transfers to Aesha’s second account were not authorised at all.



We took into account that the caregiver who committed the fraud was an employee of the charity, that the credit union had sent out account statements that should have been reviewed, and we found that the charity hadn’t asked the credit union to put a $100 withdrawal limit on Aesha’s account. However, we still thought the credit union should bear some responsibility for allowing the fraudulent withdrawals to proceed.

The credit union had agreed to make Aesha’s account a ‘two-to-sign’ account which meant both signatories needed to sign the withdrawal slips in the branch. We didn’t accept the credit union’s argument that this security measure wasn’t valid, and we highlighted the fact that the credit union had relaxed this security requirement by allowing the charity staff members to sign the withdrawal slips off-site.

The ‘two-to-sign’ security measure was put in place because Aesha was a vulnerable customer, and we considered that allowing off-site signing contributed to the fraud occurring.

We also thought that the credit union’s staff should have noticed the withdrawals slips that had been obviously altered. We agreed with the charity that the transfers to Aesha’s second account weren’t authorised and were unusual for that account, and we thought the credit union should have noticed the sudden spike in ATM use because Aesha almost never used ATMs previously.

Taking into account their partial responsibility for the loss, we asked the credit union to reimburse 40% of the money that was stolen.



Both the charity and the credit union agreed with our decision, so the complaint was settled.


Insights for participants

Vulnerable consumers often require a higher level of assistance from the financial institutions they deal with because they can have greater needs, so extra effort on the part of financial institutions will often be necessary in order to assist these consumers with their financial needs.

Fair conduct obligations on non-bank deposit takers are likely to increase in the near future with the development of the Conduct of Financial Institutions legislative framework – which means the obligations on financial institutions in relation to their treatment of vulnerable consumers are likely to increase. It may be worthwhile reviewing policies and procedures to see where your service may be able to improve.