Consumer complaint received 2023-03-11
Product: Money transfer, virtual currency, or money service — Mobile or digital wallet
Issue: Fraud or scam — 
Company: NAVY FEDERAL CREDIT UNION (CA)

Commencing on or about XX/XX/2022, I fell victim to a multilayered scam operation orchestrated by XXXX ( the Company ), which involved me making deposits for a total amount of XXXX USD from my Navy Federal Credit Union account to fraudulent investment firm. 
When determining whats reasonable and fair, we should focus on the issue of liability ; common queries include, but are not limited to, the following ( XXXX ) whether Navy Federal Credit Union did not take notice of any rule, law, or regulation, and/or possibly missed any material elements of the relevant bylaws or codes of conduct, that may have prevented them from protecting my financial safety ; ( XXXX ) whether by virtue of Navy Federal Credit Unions custodianship over my funds or by its control over them, they owed a fiduciary duty to the me and if so, whether that duty was breached ; ( XXXX  ) whether Navy Federal Credit Union promoted the transaction ( s ) in question despite being aware of the nature of the transaction ( s ) in question ( XXXX ) whether Navy Federal Credit Union was in compliance with its own policies and procedures ; ( XXXX  ) whether Navy Federal Credit Union owed duties to myself, what the scope of those duties was, and whether Navy Federal Credit Union did not uphold those duties ; ( XXXX ) whether Navy Federal Credit Unions conduct was unfair ; and ( XXXX ) whether Navy Federal Credit Union has within its power the ability to, and should, compensate me for the harm that has befallen me. 
Upon identification of such unusual or suspicious activity, it is crucial that the relevant staff member adequately describe the factors making an activity or transaction suspicious, thoroughly depict the extent and nature of this activity and properly communicate to the customer that such activity meets the relevant criteria of fraud. 
In providing its services to a customer, a financial institution is required by law to exercise the care and skill of a diligent, prudent banker. In this case, this means that the payment service provider should not turn a blind eye to known facts pointing to a real possibility that their customer is being scammed. In other words, Navy Federal Credit Union must have had special knowledge of what was occurring or been alerted to a real possibility of fraud taking place. The financial institution must have known or reasonably ought to have known that I was dealing with a scammer. 
Granted, there is room for diversity of view insofar as reasonableness is concerned. Indeed, there is a sense in which the standard of care of the reasonable person involves in its application a subjective element. 
However, it must be remembered that the correct test is always reasonable care in all circumstances, not average care. The fact that most people behave in a certain way may be good evidence that the conduct is reasonable, but this is not necessarily the case. Although reasonableness is a very fluid concept, all of the evidence suggests that Navy Federal Credit Union did not foresee the fraud and disregarded even the most obvious dangers in this respect. 
Situations do tend to repeat themselves and it is advisable to examine previous outcomes to see how the standard of the reasonable person should be applied, and that lessons can be learnt from the errors of the past. 
Apropos of the fluidity of the concept of reasonableness, all Navy Federal Credit Union has done in this regard is set up a dichotomy of having or not having the legal obligation under consideration, however, that does not go one-inch toward explaining why various regulatory authorities, has maintained that financial institutions can, and should, protect consumers using their systems, advanced technologies, and rich experience. 
Navy Federal Credit Union is obliged to take some action if it is sufficiently aware of a real possibility that a fraud may be being perpetuated. If you don't question its customers instructions or raise the possibility of a scam with the customer in these circumstances, it may be liable if the red flags indicate the customer is : particularly vulnerable, or if the possibility of fraud was serious or real, not just suspected. 
There are some recommendations to organisations for protecting customers from financial harm that might occur as a result of fraud or financial abuse ; and gives guidance on how to recognise customers who might be at risk, how to assess the potential risks to the individual and how to take the necessary actions to prevent or minimise financial harm. 
These recommendations are established as a general principle, the organisation should deliver a service that : XXXX ) Takes a proactive approach to minimising risks, impact and incidences of financial harm and it sets out systems and tools for the prevention and detection of fraud and financial abuse. As a general point, it says organisations should ensure that all systems are developed using technologies and methodologies that are effective in the prevention of fraud and financial abuse, through authorised and unauthorised payments, thereby minimising the risk of financial harm to customers. As regards to the detection of fraud and financial abuse, it says the organisation : A ) should have measures in place across all payment channels and products to detect suspicious transactions or activities that might indicate fraud or financial abuse. It then lists the following examples of suspicious activity on customer accounts : a. multiple cheque books; b. sudden increased spending ; c. transfers to other accounts ; d. multiple password attempts ; e. logins from new devices, multiple geographical locations ; f. sudden changes to the operation of the account ; Unusual transactions are transactions whose amount, characteristics and frequency bear no relation to the economic activity of the customer, exceed normal market parameters or have no apparent legal justification. 
g. a withdrawal or payment for a large amount ; h. a payment or series of payments to a new payee ; i. financial activity that matches a known method of fraud or financial abuse. 
B ) organisations should have a process in place to ensure that staff make contact with the customer to verify the financial activity, challenge its authenticity, explain the nature of the suspected or detected fraud and discuss an appropriate plan of action. 
I am deeply convinced that the disastrous results that I have previously elaborated upon will continue to ensue if no responsibility is adopted by Navy Federal Credit Union in relation to this matter. I have also thoroughly detailed why they can not simply dismiss this problem by strictly adhering to legal technicalities which, after careful reflection, struck me as being nothing more than self-interest. Indeed, it seems to me utterly unfair to disregard fragile, sensitive, and vulnerable consumers who are afflicted by such allegedly malevolent acts, thereby keeping an unjust status-quo that is corrupting our society at its core. 
Based on my analysis, and as confirmed by various authorities concerned with such matters, there is abundant evidence that forward-thinking financial institutions ought to take reasonable steps to forestall fraud, or at least mitigate its risk by using an effective risk management system, demonstrating their undisputed ability to responsibly and pre-emptively respond to questionable transactions in the digital arena. The use of such systems, largely based on newly adopted technologies aimed at effectively navigating the evolving threat landscape, is only one of a number of possible endeavours undertaken in this connection, alongside the application of past knowledge and experience related to popular fraudulent practices. 
Navy Federal Credit Unions non-observance of the fundamental principles of justice that is, to completely overlook and not even remotely try to mitigate the suffering of vulnerable consumers is inexcusable given the size of the establishment and the vast resources at its disposal as the direct result of the patronage of clients like myself. 
In summary, I respectively ask your organisation to consider my points, given your personal and companywide obligation to provide a fair and reasonable investigation into the complaint. 
I look forward to your input and would gladly cooperate to reach a fair and reasonable outcome.