Dan, a middle-aged man started communicating over the internet with a younger woman, Lia, who lived in a country ravaged by civil war. Lia lived in harsh conditions and faced extreme poverty.
Over five years, Dan regularly sent Lia money through an international money exchange company to assist her with basic necessities.
One day, Lia went to the bank to collect funds from Dan. After waiting for two hours and being interviewed by bank staff, Lia was advised the transaction had been declined.
Lia contacted Dan, who, confused, phoned the money exchange company. He was told his transaction had been declined because the company needed to comply with internal and international regulations. On this occasion, it was not comfortable completing the transaction.
Dan couldn’t get any further information from the company and was advised there was no review or complaints process. The company subsequently refunded Dan his money.
Upset about the repercussions for Lia, and frustrated with the company’s seemingly abrupt decision, Dan complained to FSCL.
The money exchange company explained that it was not satisfied with Lia’s answers and believed Dan may have been victim to a scam. It noted that as a private company, it had the right to decline a transaction when it did not feel comfortable with the transaction’s purpose or the customer’s activities. It hoped customers would understand that these inconveniences were in their best interests.
Dan complained that Lia was his fiancé who lived in extreme hardship. The company should have consulted him before making its decision, or at least have let him know of its decision so Lia could have saved herself the trip. He was also frustrated that he had received no explanation, nor information about a complaints process. He felt the company had made a cruel and arbitrary decision.
We agreed that the money exchange company was entitled to decline the transaction. We also agreed that the circumstances of Dan’s case had many of the hallmarks of a sophisticated scam.
However, we looked at the service Dan received. We agreed with Dan that the company should have notified him when it decided it would not complete the transaction. By not doing so, Dan had no chance to tell Lia, or to make alternative arrangements.
We also found that by not providing Dan with details of a complaints process, the company caused him additional distress.
We recommended that the company compensate Dan $500 for the stress and inconvenience it had caused.
We noted that Dan had been using the company’s services for some time. He was entitled to expect the money would be transferred to Lia, especially with no advice to the contrary.
The company agreed to pay Dan $500 and the complaint was settled on that basis.
Insight for consumers and participants
This case was typical of a common internet romance scam. A consumer should exercise care and vigilance when sending money overseas to people they meet online. Unlike internet purchase scams which are reported immediately, romance scams may not be uncovered for months or years, until the person sending money overseas realises they have been scammed. By this time, it is too late, the sender has suffered losses.
It is not uncommon for a money exchange company to decide not to provide a service where it suspects the consumer may be caught up in a scam. On this occasion, while Dan suffered some inconvenience, he was lucky the company identified the possibility of a scam and protected him from further financial loss.
However, the company should have advised Dan of its complaints process when Dan expressed dissatisfaction about the company’s decision not to accept any further transactions from him.