Kathy Winton and Mark Richter took out a construction loan with ANZ last year to renovate their 1920s bungalow But the first payment from ANZ to the builder turned into a disaster. At the end of November last year they submitted a paper form unaware it contained a “fraudulent” bank account from scammers who had intercepted an email from the builder, Ms Winton said. The large sum was transferred by ANZ even though Mr Richter had mistakenly put the wrong date on the form. Then a new email came through supposedly from the builder alerting them to another change to the bank account details as a second progress payment loomed. This came just 11 days after the first payment. The assistant principal claims while ANZ noted discrepancies in the second payment instructions and invoice, the issue was not escalated internally to the scam team, and the couple identified the fraud themselves three weeks later. Never miss the latest wealth and culture news from Australia and around the world — download the news.com.au app direct to your phone. She described the situation as “messy”. “It took a real toll on us emotionally and psychologically. It was a really challenging time for us in our family with our two kids and Mark’s father was dying throughout this time as well,” she told news.com.au. “As a public servant myself, working towards improving the lives and opportunities of young people, this experience has been incredibly demoralising and disheartening. “We teach our students to make morally responsible decisions based on integrity and compassion, and yet our encounter with the bank has been the complete opposite of this.” MORE: What your home will be worth in 2030 Given the confusion over the second bank account, ANZ attempted to call the builder on 10 December and left a voicemail. Three days later the builder returned the call and alerted the bank that these account details were fraudulent. But no checks were done on the first payment — despite the couple later discovering the funds weren’t removed by the scammer until December 13, weeks after the couple’s money landed in the account. Ms Winton said it was a missed opportunity to stop their money being stolen. ANZ said in a letter seen by news.com.au that calling the builder earlier “would not have made a difference” as no one knew the first payment had been compromised. The scam wasn’t even uncovered until December 29 when the couple realised “something really strange” with the builder’s email address, which was wrong. “We contacted the bank immediately to put a freeze on it,” she said. “I think what’s really upset us is that it took that long and it was left to us to realise that there’s a scam when there’s all sorts of indicators much earlier on that the bank would have been much more familiar with.” Do you have a story? Contact sarah.sharples@news.com.au The 46-year-old believes an urgent investigation should have been launched by the bank into the different accounts, particularly as the first scam account was registered with the Commonwealth Bank in Tasmania. Their Melbourne builder banked with Westpac. Mr Richter, 47, added ANZ is processing these types of transactions hundreds of times a day and thought they would have come across this “incident a lot more than us as a first time construction loan customer”. “There’s a deep red side to it. There is no skin off the bank’s backs – they have a scam team, just send it to them. That should be an internal escalation straight away,” he added. In 2024, Australians lost $152.6 million to payment redirection scams up from $91.6 million the prior year. It was the third biggest scam type in terms of losses last year. But even trying to ring the alarm bell when the fraud was uncovered the couple, who were in the Philippines at the time, experienced a cascade of issues. Initially, ANZ’s international number did not connect. When they eventually got through, they would spend a lengthy amount of time explaining the situation only to be transferred and disconnected, which happened three times. They claimed they spent four hours on the phone in total to various departments trying to report the fraud. ANZ told the couple an investigation was being opened and when they returned from holiday they discovered it had already been closed with no notice. They later lodged a complaint and were offered a $750 goodwill offer by the bank. “Customer service has been very poor especially when we were already really upset and quite distraught,” Ms Winton said. “There was no one involved in the customer service experience who was really listening and able to help us.” Ms Winton also questioned how ANZ has a “gazillion dollars and systems” yet still relies on paper forms. “Other banks do have multi-factor authentications. Builders also have received direct phone calls from the banks as well, like the bank might call first, transfer $5000, then call to make sure they’ve received it and then transfer the rest,” she claimed. “So these are all little processes that could prevent what has happened here, but ANZ just doesn’t have that factored into their processes. “This paper-based process is really archaic and it’s one of the things that should be updated if they’re looking for things to improve. “Before this incident, we had successfully transferred $75,000 (of our own funds) to the correct builder via five separate online transactions, with all details securely stored in our ANZ portal. “However, the current (paper) process lacks safeguards to verify and lock in a BSB and account details, exposing customers to potential fraud — a gap in ANZ’s system that can be exploited.” Mr Richter has also been left furious, claiming the bank attempted to “flip” the script and blame the scam on them, questioning why the payment form was processed when he had incorrectly put in a future date. “It could have been the opportunity to stop the payment. Some kind of check and balance, which was (mostly) absent throughout the whole ordeal,” he said. ANZ said in letters seen by news.com.au that it “does not have a process for dealing with typographical errors in payment instructions” and it was “evident that this was a minor error made when completing the form”. The bank added the error was only being questioned by the customers after the fact because they had been scammed. “Such an incorrect date does not constitute a valid reason to withhold payment to the builder, nor does it render the payment instructions invalid. The payment instructions remained clear and unambiguous despite the error,” the bank wrote. The couple took the case to industry funded dispute resolution service, the Australian Financial Complaints Authority (AFCA), who recently sided with ANZ in its preliminary determination. The loss of the funds has forced the couple to scale back the renovation, which has now been completed, and has also been “traumatising”, added Ms Winton. “Additionally, we recently became aware – on 3 April – of APRA’s acceptance of a court-enforceable undertaking from ANZ to address systemic weaknesses in the bank’s non-financial risk management and risk culture,” she said. “This development reinforces our belief that our experience may not be an isolated one, but rather indicative of broader issues within the organisation.” The Australian Prudential Regulation Authority said its concerns included weaknesses in ANZ’s operational risk and compliance management and a reactive risk culture. An ANZ spokesperson said they are unable to comment on individual customers, particularly as the case is being considered by AFCA. “We always attempt to recover funds lost to scams or fraud,” they said. “However, the ability to recover funds depends on a number of factors including how quickly it is reported to us, whether they are transferred to another financial institution, and the speed in which funds are then on-transferred by scammers.” ANZ takes fraud and scam matters seriously and regularly reviews accounts for suspicious or unauthorised activity in line with our anti-fraud obligations, they added. Individuals should be on high alert and double check all details before making any payments and verify the details directly with the legitimate company or person before sending funds, they noted. sarah.sharples@news.com.au