Justin Smith, a resident of Toronto, had his bank debited $ 3,000 from his account without his consent.
The “right of set-off” is the little-known banking principle applied by Scotiabank, which effectively gives ownership of all depositors‘ funds to the bank.
By using this clause in the bank’s T & Cs, the bank is able to legally recover all the debts owed to it.
Scotiabank of Canada recovered $ 3,000 (CAD) from one of its clients‘ accounts after being the victim of a recruiting scam
Justin Smith of Toronto, who is a long-time customer of Tangerine – the online affiliate of Scotiabank – opened up about his ordeal with the bank in a story that illustrates the pitfalls of trust banking versus cryptocurrency.
CBC News reported that Smith was recently the victim of a sophisticated recruiting scam that saw him inadvertently deposit a bogus check worth $ 3,000.
A Toronto man was the victim of an employment scam, but was even more shocked when his bank, Tangerine, took about $ 3,000 from his account to make up for what she had lost to the fraudsters.
When Smith realized he had been duped and informed the bank of the problem, the bank invoked a little-known clause in its Terms of Service to deduct the amount from a separate account.
Smith’s Fraud Nightmare
The problems started when Mr Smith was contacted by scammers who set up an elaborate plan to make him believe he had landed a home data entry position at retail company Sobey’s.
He was given a seemingly convincing employment contract, a check for $ 3,495 and the instruction to pay $ 3,000 to a company called Tech Insight Services, apparently to supply the equipment.
When Smith deposited the check, it seemed genuine enough to deceive even the bank, which credited his account with the amount. Smith then sent the requested $ 3,000 payment to the crooks, unaware he was being cheated. He then received another demand for payment of $ 3,500, which set off an alarm in his head. He contacted the bank to inform them of his suspicions, but it was too late at this point for the bank to reverse the $ 3,000 transfer.
It was then, Smith says, that Tangerine asked him to cover the $ 3,000 with money from his other accounts at the bank. He refused to do so, and the bank took the money anyway, debiting his $ 3,000 tax-exempt account without his consent.