He was scammed $16K from his BMO line of credit. The bank is charging him interest anyway

James Mathelier says he’s had many sleepless nights in the past four months after falling prey to a costly phone scam.

Now, out thousands of dollars, the Toronto man is speaking out, saying his bank didn’t do enough to protect him and is even charging interest on the funds he lost from his line of credit.

On April 24, the 63-year-old says he answered a call from a man claiming to be a Bank of Montreal employee, warning him that fraudsters had accessed his bank account. The phone number matched his bank’s, making it seem legitimate.

The caller then asked for a verification code which was sent to Mathelier’s phone, supposedly to confirm his identity.

“I knew I shouldn’t share codes over the phone, but he offered for me to call the bank back to continue this process. He said we had to act quickly because money was being withdrawn,” Mathelier told Radio-Canada.

“I was panicking.”

After sharing this code, three withdrawals were made from his personal line of credit: $7,500 and $1,452.72 that day, and another $7,500 the next day. “It’s been impacting my mental health. I can barely sleep,” Mathelier said.

Mathelier says he contacted BMO and police days later in hopes of recovering the funds. Toronto police confirmed a report has been filed and is being “actively investigated,” but did not share further details.

Bank ‘not responsible,’ but reimbursed some funds

On May 11, the Bank of Montreal issued Mathelier a refund for the smallest of the amounts withdrawn, but not for the other two.

“Please note that this is a scam, which unfortunately is not covered by our fraud services; therefore, the Bank of Montreal is not responsible for the loss incurred,” BMO said in a July 5th email to Mathelier seen by Radio-Canada.

Mathelier says he was “baffled” that the financial institution would choose to cover a portion of the stolen funds if it denied all responsibility.

“I asked them, ‘Why reimburse $1,452.72, and not the remaining $15,000?’ It doesn’t make any sense.”

Radio-Canada asked BMO that same question, but the bank refused to comment, saying it is committed to the confidentiality of its clients.

Financial crime expert Vanessa Iafolla says by issuing a partial refund, the bank acknowledges some responsibility in the matter.

“They don’t just reimburse people for fun or goodwill — they reimburse them when something has gone wrong,” said Iafolla, a Halifax-based anti-fraud consultant.

Further, she added, banks have processes and algorithms designed to catch irregular transfers.

“The bank didn’t notice the first unusual transaction and they didn’t notice the next two that happened in 24 hours, which is usually a pretty glaring red flag that something’s wrong,” Iafolla said.

Bank charging $200 in extra monthly interest

On top of scrambling to recover the $15,000 taken from his personal line of credit, Mathelier says he is also being charged interest by BMO on the new “debt.”

Before the scam, he paid about $315 in interest every month. Now, his monthly payments have soared to $550.

I feel like I’m choking. I can’t take it anymore. – James Mathelier

With rent and overall cost of living going up — and a toddler at home — he says he’s struggling to stay afloat on his teacher’s salary.

“I feel like I’m choking. I can’t take it anymore,” he said.

Iafolla says the bank could suspend interest payments until the issue is resolved.

“But it seems like they’re profiting off the client’s victimization rather than taking that into account. They can write that interest off. There’s nothing to say that that interest has to be paid by the client, or indeed has to be charged at all,” she said.

The Bank of Montreal did not explain why it is continuing to charge interest on the stolen funds, after recognizing they part of a scam.

“With phone scams and digital crime on the rise, it’s important to remember that protecting bank accounts is a partnership between customers and their financial institution,” BMO said in an emailed statement to Radio-Canada.

“Customers are responsible for safeguarding their account information, online banking passwords and PINs at all times.”

Beware of fraudsters asking for 2-factor codes

John Horncastle, spokesperson for the Canadian Anti-Fraud Centre, says this type of phone scam, where a fraudster pretends to be a bank investigator, is on the rise across the country.

“This is one of the top-reported scams,” he said in an interview. So far, in 2023, the centre has received 1,830 reports involving 681 victims, he said. Nearly $6 million was lost in the first six months of this year, he added.

The losses are well on track to surpass the $6.9 million recorded in 2022 by the end of the year. More than 1,000 victims had reported such scams last year.

And that may only be the “tip of the iceberg,” Horncastle said, because the Anti-Fraud Centre estimates that less than 10 per cent of victims come forward to authorities after they’ve been scammed.

Horncastle says with two-step or multi-factor authentication now widely used as an extra layer of protection, fraudsters are now commonly finding ways to convince victims to share their verification codes, allowing the fraudsters to gain access to their bank accounts.

In the last few months, BMO emailed tips to customers to help protect their accounts from an “ongoing fraud trend,” saying the bank would never call, email or text asking for their verification code, passwords or answers to their security questions.

The bank adds that some fraudsters “might even possess other personal information to make the scam more convincing.”