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Justin Smith was hit with a one-two of bad luck.
First, the Toronto man was duped by a work scam that earned $ 3,000. Then his longtime bank, Tangerine, helped himself collect the money Smith had in his tax-free savings account to recover what he had lost in the scam.
“You keep your money in the bank because you think it is safe,” he said. “And they treat the money as their own, and they just move it to protect themselves. It’s not fair.”
Mandarin is a Scotiabank’s online subsidiary offering free savings and checking accounts.
Here’s how the double episode of bad luck unfolded:
Smith, who works as a delivery clerk, had applied to work from home as a data entry clerk for the Sobeys grocery chain. He was offered the job and was thrilled to receive an employment contract along with a check from his new employer for $ 3,495 to purchase a laptop, phone system, headphones, and various other office equipment.
“It all felt totally authentic and real,” he said.
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Smith had checked the names of the people handling his hires and reviewed their LinkedIn profiles to confirm they worked for Sobeys. So when he received an invoice from a company called Tech Insight Services for office equipment and Sobeys’ hiring manager asked him to make a $ 3,000 payment right away, he immediately sent an electronic transfer.
“At the time I only had $ 800 or so in my check account, but after I deposited the Sobeys check, I had more than $ 4,000,” he said.
What Smith didn’t know was that the whole process was a sophisticated scam. The website where he applied, the alleged hiring managers, the check … they were all fake. His job application hadn’t been sent to Sobeys at all. He had fallen into a trap to scam eager job seekers. The check even fooled Tangerine; the bank immediately deposited it into Smith’s account.
The alarm bells didn’t start ringing until the next day, when Smith’s alleged new employer told him he would have to send another $ 3,500 for a new desk.
“At this point, I got suspicious because nobody spends that kind of money on a desk,” he said. “I called Tangerine and said ‘OK, I deposited a check yesterday, guys let me send the money. I’m worried this check will bounce.'”
WATCH | Bank raids on the fraud victim’s account:
The Go Public report investigates banking rules that allow for the seizure of funds from different accounts. Check the terms and conditions of your account, it is in small print under “right to offset”. 2:09
Deep in the fine print
Smith quickly learned that the scammers had already accepted his e-transfer, and a Tangerine rep said it meant it was too late to cancel.
“He asked ‘Do you have money in your other accounts to make up for it?’ and I told him I didn’t want the bank to take money from those other accounts. “
Because his tax savings account was registered with the federal government, Smith believed the money it contained was untouchable. He was wrong.
Deep in the fine print of agreements that many customers receive when opening a bank account is a clause known as a “right to set off”, sometimes also referred to as a right to “set off”. It claims that the bank has the legal power to seize funds from a debtor or guarantor of a debt. While that right may vary by product or plan, it is in most agreements; Registered RRSPs and pension income funds are generally exempt.
This means that if the bank accepts a check or other type of deposit that does not go as expected and a customer withdraws or transfers the funds, the bank has actually granted a bad loan. He then has the right to access the money in other accounts he holds for that customer in order to recover his loss. There is no need to obtain authorization or even notify the customer in advance.
Shortly after Sobeys’ fake check bounced, Tangerine withdrew just over $ 3,000 from Smith’s account.
Smith sent two letters of complaint to the bank, asking for compensation, but each time he was told that the bank is not responsible for his loss and that he should report the scam to the police.
Workplace scams became common during the pandemic, according to the Canadian Anti-Fraud Center. CBC News reported on a similar scam involving Sobeys in June. In that case, the victim’s bank, the Bank of Montreal, detected the fraud and did not send the payment.
Sobeys is aware of the fake websites that bear his name and said he is monitoring the web 24/7 to try to shut them down. In a statement, the company said anyone “wishing to join the team or confirm the legitimacy of a job offer” should check jobs.sobeyscareers.com.
Good news
After being contacted by CBC’s Go Public team, Tangerine said he will refund the $ 3,000 to Smith and also pay $ 250 for a credit monitoring service for him.
In an email sent to Smith that was shared with CBC News, the head of the bank’s customer response group, Emery Sziraky, said, “We have conducted a thorough review of your recent experience with Tangerine and are deeply sorry. of not having met your expectations. “
The bank also emailed Go Public a statement saying it was “pleased” to have resolved the matter to Smith’s satisfaction. The statement included a fraud warning and said “Tangerine” works[s] closely with the Canadian Anti-Fraud Center, the Canadian Bankers Association, law enforcement and counterparties of other financial institutions “to ensure customer protection.
But Doug Hoyes, a bankruptcy trustee in Kitchener, Ontario, said all Canadians should be aware of how common it is for banks to access client accounts to recover their losses.
“It blinds people,” Hoyes said. “I’ve seen it happen a thousand times.”
Hoyes said banks typically suspend large checks deposited in new customer accounts; they cannot access the funds until the check is cleared. But for longtime and trusted customers, banks often grant some form of credit and make the funds available immediately.
Hoyes said most customers appreciate being able to access deposits immediately.
“In most cases, what the bank did is very useful: ‘Hey, put the money, you can use it.’ But in this case it failed,” he said.
A five or even three day suspension on Smith’s check would have thwarted the scammers, but he was a longtime Tangerine customer. He opened an account in the late 1990s, when the bank was still called ING Direct, before a rebranding. Thus he had immediate access to the funds.
Hoyes added that he often tells his clients, who all have money problems, to open bank accounts with two different financial institutions. “It’s wise to have your assets in a bank other than your debts, if that’s possible,” he said. That way, if a payment goes wrong in some way, the bank won’t be able to access other accounts on file, he explained.
As for Smith, he is still eager to find a new job and is grateful that Tangerine has decided to do “the right thing”.
“I don’t want to get noticed for being a victim here,” Smith said. “I’m just trying to help other people not become a victim of these scammers or, frankly, become the victim of their bank.”
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