How to Respond to Bank or Credit Card Fraud in Canada

Ask MoneySense

We have been defrauded of over $20,000 by someone who was able to make unauthorized e-transfers from our bank accounts. The bank has recovered a small portion of the funds and has refused responsibility for the remainder. I am at level three of the bank’s complaint process and wondering how to proceed.

Do I need a lawyer now, before filing a new complaint?

My home insurance doesn’t cover anything. I have contacted the credit bureaus and I’m making a police report.

—William

How to handle financial fraud and e-transfer theft

I’m sorry you’re dealing with this, William. Losing money to someone who accessed your bank account is stressful and invasive. Interac e-Transfer is generally a secure payment method in Canada; Interac reported that in 2023 about $0.03 was lost to fraud per $100 transacted across its ecosystem. Still, fraud does occur, often through email or text message schemes that trick people into handing over login credentials or one-time codes.

Fraud involving e-Transfers commonly takes several forms, including fake tax-refund notifications, lottery or prize scams, rental and sales cons, relationship or emergency appeals, work-from-home bait that requests upfront payments, and email-account takeovers that allow criminals to intercept and redirect Interac e-Transfers.

Likely cause and immediate steps to take

Given that transfers were sent directly from your account, it’s likely your online banking credentials were compromised—typically through phishing or a malicious website that captured your login and authentication details. You’ve already taken several critical steps by contacting your bank, the credit bureaus and by filing a police report. Continue to do the following if you haven’t already:

Freeze and flag accounts: Ask your bank to place flags on all affected accounts and any linked accounts at other institutions. Close or temporarily freeze compromised accounts if recommended.
Change credentials: Reset passwords and security questions for all financial and email accounts. Where available, enable two-factor authentication (2FA) using an authenticator app rather than SMS.
Monitor credit: Contact credit bureaux to place an alert on your file and watch for new accounts or unusual inquiries. Consider credit monitoring if you don’t already have it.
Document everything: Keep records of all communications with the bank, police reports, and receipts of any recovered funds. This documentation will be important for complaints and any legal action.

How to report bank account fraud

When you are a victim of fraud, reporting broadly helps build your case and assists law enforcement. In addition to your bank and local police, report the incident to the national anti-fraud authority and to the two major credit bureaux. Make sure your police report is filed and get a copy or file number for your records. Follow up with your financial institution with any new evidence or updates.

When is a transaction considered unauthorized?

Each financial institution defines “unauthorized transaction” differently. Review your cardholder agreement and online-banking terms to understand the time limits and conditions that determine responsibility. Under typical consumer protection guidance, you may be held responsible for losses if you shared your PIN, used easily guessed information as a PIN, wrote the PIN down near the card, failed to report a lost or stolen card within the time required by your agreement, or failed to cooperate with an investigation.

If the bank is refusing further reimbursements, ask for a clear written explanation that cites the specific terms or policy basis for their decision. Request a complete chronology of the transactions and any logs that support their conclusion. Escalate the complaint within the bank and keep copies of all correspondence.

Next steps if the bank won’t cooperate

If you can’t resolve the matter directly with the bank, you can file a complaint with the Ombudsman for Banking Services and Investments (OBSI). OBSI reviews disputes between consumers and participating banks and can make recommendations. Also continue working with the police—fraud investigations take time, and a criminal file can strengthen your civil or regulatory complaints.

Consulting a lawyer who specializes in bank fraud or consumer finance litigation is a reasonable next step. An initial consultation can clarify whether you have grounds to pursue legal action against the bank, whether to seek a civil suit, or whether other remedies apply. A lawyer can also advise on preserving evidence, dealing with subpoenas, and the practicalities of pursuing a claim.

Insurance and prevention

Home insurance policies sometimes include identity-theft coverage, but this varies widely and may not cover losses from direct account takeovers. If your insurer says the loss is excluded, there may be no insurance remedy. Check your policy wording carefully or ask for a written denial that you can use as part of other complaints.

To reduce future risk, enable account alerts for large transactions, use 2FA where possible, secure your email account with strong passwords and 2FA, and be wary of unsolicited texts or emails asking for personal or banking information. Regularly review account statements and set smaller daily transfer limits where your bank permits it.

Summary

It appears the fraudsters gained access to your online banking, and your card or account agreement may limit recovery options. Keep escalating the bank complaint, file with the Ombudsman if necessary, and continue cooperating with police. Consider a consult with a bank-fraud lawyer to determine whether legal action is worthwhile. Although this is a difficult situation, thorough documentation and persistence improve your chances of recovery or a favorable review.

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