$1,600 taken from customer’s account — and her bank won’t say why

Angel Pui was pleased when the business she started in the pandemic, selling luxury handbags online, made a sale in South Korea.

The timing was good, thought the Vancouver mother of two — right before the Christmas holidays and the expenses that come at that time of year. 

She checked her bank account with Tangerine — an online subsidiary of Scotiabank — and confirmed that her customer had transferred $1,600. 

She then shipped the coveted Gucci handbag, thinking all was well.

But in January, Pui checked her bank statement and saw that the money was gone. When she called Tangerine, Pui says she was only told the payment had been recalled by a bank in South Korea.

“Wait a minute, I’m out $1,600,” Pui remembered saying. “What do you mean you can’t tell me anything about it?”

“I was furious,” she said. “I was like … how can you do this without my consent? It’s my money.” 

Pui fired off an email, asking what happened to her money. She got no response.

It’s a problem small business owners are increasingly facing in the pandemic as more transactions move online, says Laura Jones, executive vice president of the Canadian Federation of Independent Business. 

“When you don’t know why the money’s been withdrawn, that’s incredibly frustrating,” said Jones. “And most people would say that doesn’t pass any kind of fairness test.”

After Go Public got involved, Tangerine put $1,600 back in Pui’s account, as a “goodwill gesture,” but didn’t say why or what had happened in the first place.

Tangerine declined to be interviewed. In a statement to Go Public, a spokesperson said she couldn’t comment on another financial institution’s request to recall the funds, but that when the bank receives these requests, it considers “a variety of factors before making our decision.” It declined to specify what those factors are.

‘I just felt a sense of shock’

Even though Pui’s business was less than a year old, she says she’s sold many luxury handbags during that time and never before had a problem.

Her business is a niche market — and a glimpse into a world most people know nothing about. 

Designer fashion houses like Chanel, Hermès and Gucci produce a limited number of exclusive handbags each year. Pui noticed women posting about their latest purchases on Instagram and then tracked the bidding wars as other women tried to get their hands on a limited edition handbag. 

“Everyone is chasing after the same unicorn,” she said. “It’s hard to get. It’s beautiful. And they can see that it’s going up in value.”

She created a website for people to buy and sell their luxury handbags — including rare bags she’s forked out for, in the hopes of turning a profit. Before long, she says, inquiries started to pour in from around the globe.

“The most popular place for luxury handbags is Asia — China, Taiwan, Hong Kong, Singapore,” she said. “But it’s really all around the world.”

So there were no red flags when Pui received an inquiry from South Korea about a Gucci bag and was then asked if the payment could be made by electronic funds transfer (EFT). Unlike e-transfer, which uses email, EFT moves money directly from one person’s bank account to another’s and doesn’t require a trip to the bank, like sending a wire transfer — or the associated costs.

“I said sure, thinking it was really safe,” said Pui. “I take PayPal, [electronic] bank transfer, wire transfer, all of the options. And I was really trusting, never having an issue before.” 

Sure enough, the $1,600 arrived shortly after and remained in Pui’s account for a month. But then, her accountant asked her to download all her statements for her taxes.

“And that’s when I noticed that there was an entry called ‘reversal of payment’ — $1,600 was out of my bank account,” she said. “I just felt a sense of shock.”

She tried reaching out to the buyer, but says several emails went unanswered.

But what really angered Pui was the deafening silence from Tangerine when she tried to get to the bottom of her missing money. She says no one responded to her initial three emails and she only got a reply after Go Public got involved.

Tangerine’s chief operating officer Guaurav Singh said the bank would reimburse her money, but added that her account was not intended for business purposes. Go Public asked repeatedly whether a different account would have provided more protections — when a spokesperson finally replied, she declined to address the question.

“I’m not satisfied that they didn’t give me a clear answer of what happened,” said Pui. “It just leaves me more frustrated.”

Transparency ‘always desirable’

Perhaps surprisingly to many people, customers at most financial institutions — including Tangerine — agree to terms and conditions that allow their banks to move money out of an account. 

There’s no need to get authorization or even alert the customer.

“Not all bank agreements are the same, but usually they have language in them that gives the bank a lot of scope for how to handle these type of cases,” said Sarah Bradley, ombudsman and CEO of the Ombudsman for Banking Services and Investments.

Reasons for not informing the customer could include cases of alleged fraud or money laundering, she said. 

WATCH | Tangerine eventually put $1,600 back in account as ‘goodwill gesture’

A Vancouver woman who said she had a $1,600 e-transfer removed from her account without explanation by her bank learned the fine print in most bank agreements says there’s no obligation for a bank to explain why it reversed a deposit. 2:09

Bradley says, in the cases she’s reviewed, banks will often provide the reasons — but understands how frustrating it can be when they don’t.

Transparency is “always desirable and it’s just a part of good customer service,” she said, adding that customers who can’t get answers can take their complaints higher — within the institution or, failing that, to an external ombudsman. 

But the executive vice-president of the Canadian Federation of Independent Business, Laura Jones, says customers shouldn’t have to fight to find out what happened to their money.

“There needs to be a whole lot more transparency on the part of these big financial institutions,” said Jones. “At a minimum, there needs to be some requirement for the financial institutions to get back to the business owners and communicate with them.”

Jones says the pandemic is compounding problems — more small business owners have moved online, where they’re reporting an increase in this type of suspected fraud and say getting their money back is an uphill battle. The big banks have a series of time-consuming steps that must be followed in order to escalate a complaint before it is eventually heard by an internal ombudsman.

“Most banks or financial institutions have some [internal] appeal process, but we have yet to talk to a business owner who’s actually won one of these appeals,” said Jones. 

Further complicating things, the growing scale of the gig economy means many small business operators are using personal accounts, which may offer fewer protections than business account options — account agreements vary among banks. 

The whole ordeal has soured Pui on her online bank. 

“I chose Tangerine because it seemed like it was really convenient … modern and easy,” she said. “But when something like this happens … there was no brick and mortar. You couldn’t line up at the teller and demand to get your money back.” 

She’s moved most of her business to another financial institution, hoping to make the point that customers like her shouldn’t be left to wonder about what happened to their own money.