A BC court ruling now allows Canadians to sue banks that fail to warn them about fraud. Here's what it means

At the federal level, the Financial Consumer Agency of Canada (FCAC) monitors banks’ compliance with the Canadian Code of Practice for Consumer Debit Card Services, which sets baseline disclosure and security standards for federally regulated institutions — but does not impose a specific “duty to warn” obligation.

How OBSI escalation path works — and where it falls short

If your bank has denied a fraud claim, the Ombudsman for Banking Services and Investments (OBSI) is typically the first escalation step and costs nothing. In 2025, OBSI opened more than 6,100 investigations — nearly double the previous year — after assuming its role as the single external complaints body for all Canadian banks.

OBSI can recommend compensation of up to $350,000 where a complaint has merit. But its recommendations are not binding on banks. In its 2025 annual report, OBSI disclosed cases where banks withdrew settlement offers after consumers escalated to OBSI — a pattern the ombudsman reported to regulators as a systemic issue.

For losses above the OBSI cap, or in cases where a bank refuses to follow an OBSI recommendation, a formal legal claim — referencing the Zheng precedent where appropriate — may be the only remaining path. For BC residents in particular, the precedent now makes that claim harder for a bank to dismiss on the pleadings alone.

What ‘duty to warn’ means for your bank’s fraud obligations

The practical implication of the Zheng decision is relatively straightforward: if your bank had knowledge of a fraud pattern and processed your transfer anyway without raising a red flag, that silence may matter.

This applies most directly to what fraud specialists call authorized push-payment (APP) scams — cases where the account holder is deceived into voluntarily sending money. Banks have traditionally denied these claims by arguing the customer authorized the transaction. The Zheng ruling suggests that authorization is not a complete defence if the bank knew a fraud was in play and said nothing.

In the Canadian Association of Private Lenders (CAPL) analysis of bank fraud, one of the most documented patterns involves elderly or vulnerable account holders making large, unusual cash or wire transfers — with banks processing the transactions without inquiry. In the case of 89-year-old Victoria resident Ray Anholt, who lost $1.7 million in a “bank investigator” scam, both CIBC and RBC declined to comment on why the repeated large withdrawals were not flagged.

Under the Zheng framework, if either bank had internal knowledge of that type of scam — and there is substantial published guidance about bank investigator fraud — the failure to warn becomes legally meaningful.

What to do now

• Review your bank’s denial. If your bank rejected a fraud reimbursement claim by citing that you authorized the transfer, document whether the teller — or any bank communication — failed to flag unusual transaction patterns. That fact pattern is now legally relevant under the Zheng precedent in B.C.
• File a complaint with OBSI. If your bank has denied your claim and your loss exceeds a few thousand dollars, escalate to OBSI at no cost. It can recommend compensation of up to $350,000.
• Consult a consumer lawyer if your fraud loss exceeds $10,000 and OBSI does not resolve your complaint. Cite the Zheng v. Bank of China (Canada) ruling in any formal complaint or legal correspondence.
• Enable Autodeposit on your Interac e-Transfer account. This eliminates the security-question vulnerability that scammers most commonly exploit for intercepted transfers.
• Report fraud promptly. FCAC guidance advises that most account holders have 30 days from their statement date to dispute a transaction — but your bank’s agreement may set a shorter window.