A woman who tried to use a cheque from a bogus UK 'bank' to pay her debts has revealed the first scam case of its kind in New Zealand.
The Banking Ombudsman has now warned Government agencies and the finance sector about WeRe Bank, which isn't actually a bank -- just "run online by one person and with a mobile phone number".
Ombudsman Nicola Sladden says the woman laid a complaint against a local bank after she tried to use a WeRe cheque to pay off her credit card.
"The customer was upset the bank wouldn't honour the cheque and the relationship deteriorated to the point the bank closed the customer's account."
The Ombudsman was asked to look at the bank's actions and whether they were legal.
"In short, our investigation revealed the 'cheque' was not actually a cheque because the issuing 'bank' was not actually a bank," Ms Sladden says.
WeRe was set up in the UK last year, claiming to be a "common law bank". Victims of the scam send the bank an IOU of £150,000 and then pay membership fees of £10 a month for an account.
It deals in its own currency called the "Re" -- a unit of "space and time" used to pay debt.
Customers are given a cheque book which they can write cheques drawn against the IOU to pay their debts. The documents aren't legal tender.
Ms Sladden says this is the first case in New Zealand her office is aware of, but there have been cases in Canada and the UK.
She warns there are serious consequences to using or joining the 'bank'.
"Because WeRe cheques are worthless, customers' attempts to repay debt with these cheques are not successful and so people face all the risks of late payment, from additional charges to repossession."
The investigation found the bank was right to end the customer's account and followed the correct process.
Newshub.
