This 50-year-old lost $10,000 to fraud and his bank didn’t cover a dime. Will new changes to the Bank Act help consumers?

The Government of Canada announced a new anti-fraud strategy in Budget 2025 that will include amendments to the Bank Act. Will it be enough? 

Adam Freed didn’t suspect the caller at first.

The 50-year-old father of two was working from his Ottawa home on Sept. 18 when his phone screen lit up. The incoming call was from TD Canada Trust, according to his phone, and the number matched the one printed on his debit card.

On the other end of the line, a bank employee warned Freed that a suspicious Bitcoin purchase had taken place using his account. Freed had never bought Bitcoin in his life.

Alarmed by the thought that someone was trying to steal from him and his family, he answered a series of what seemed like routine security questions. He was also instructed to change his password through what the employee said was a “secured TD text system.”

Then came a strange request by the caller: cut the card in half and seal it in an envelope. A courier would come by the house to collect it and bring it to the bank for a “forensic investigation” of the chip.

Fifteen minutes later, a man who appeared to be in his 30s with thinning hair arrived at his doorstep, got the card, then vanished in a silver Honda Civic.

It wasn’t until the next day that Freed realized the supposed employee was, in fact, a scammer. Just like that, $10,000 was missing from his bank account, and TD Bank wouldn’t reimburse him.

“Our findings indicate that the individual responsible had access to financial information you are responsible for protecting,” TD wrote in an email to Freed following its investigation.

The email said that Freed is expected to safeguard his card, account information and credentials used for electronic banking under the product agreement.

The loss was a tough financial hit for Freed and his wife, Michelle Gauthier. Their son has GRIN2B-related disorder, an ultra-rare condition that causes lifelong cognitive and physical disabilities.

“It made me feel awful. It made me feel unprotected, vulnerable,” said Freed. “The whole approach was very professional and very, very convincing.”

Over the past five years, the amount Canadians have lost to bank fraud has soared. The type of scam Freed fell victim to, the so-called “bank investigator scam,” saw the largest increase in the number of victims followed by phishing scams in 2024, according to the Canadian Anti-Fraud Centre (CAFC). 

Consumers pay the price

As it stands, the Bank Act leaves consumers liable for most types of banking scams.

The only exceptions are scams involving unauthorized credit card transactions, where consumers have a maximum liability of $50, unless they have demonstrated “gross negligence.”

For debit card transactions, consumers are not responsible for losses in circumstances beyond their control. That includes, for example, someone using their card when they had already reported it as lost or stolen, according to the Government of Canada website.

But there are many types of scams where banks are not required to cover losses at all — and consumers can be shocked to discover their bank won’t help them when thousands, or even hundreds of thousands of dollars, have disappeared from their accounts.

“I think most Canadians agree that banks should bear more accountability than they currently do,” said cybersecurity and safety expert Claudiu Popa.

“If they shift the full burden of fraud losses onto vulnerable customers, there’s a lot less incentive for the financial system to improve its own safeguards,” he said, adding that the banks have the size and resources to detect and prevent fraud.

A shared responsibility model

David Shipley, the CEO of New Brunswick cybersecurity firm Beauceron Security, argues that if the banks are forced to take full responsibility for losses due to scams, they will likely pass the costs onto customers through higher interest rates on credit cards or service charges.

“The danger if the bank becomes solely responsible, or even up to a threshold, is that people can feel like it’s not a risk. I can do whatever I want, and that can actually make the situation worse,” he said.

Shipley said that Canada should instead try to achieve a shared responsibility model between the banks and customers. Banks should be required to strengthen security, such as having mandatory multi-factor authentication in place, and give customers more control over their accounts, such as the ability to disable e-transfers and cap outgoing transfer amounts, he said.

Banks should also be more transparent about how much money is lost due to fraud and how many cases result in refunds, since not all fraud is reported to the RCMP, Shipley added.

“We need to destigmatize it,” he said. “Because the irony is, criminals talk about this stuff way more transparently to each other and brag about it to the world than we do as a society in trying to defend ourselves.”

Read the Full Story at The Toronto Star