The Insurance & Financial Services Ombudsman Scheme (IFSO Scheme) is warning businesses that insurance may not cover them if they’re involved in an online marketplace scam.
“Business insurance policies often contain fraud exclusions. This means if someone has been duped into handing over items, the usual cover for lost/stolen items doesn’t apply,” says Karen Stevens, Insurance & Financial Services Ombudsman.
“Things like Facebook Marketplace scams have increased in the past few years, meaning there’s a real risk to businesses if they aren’t alert and vigilant when selling items,” she says.
In a recent case investigated by the IFSO Scheme, Ajay- sold some car parts on behalf of his company, including a gear box and motor, clutch and aluminium radiator. He listed the items on Facebook Marketplace, and someone agreed to buy them for $10,000.
A few days later the buyer said payment had been made, and sent a copy of a New Zealand Driver’s licence which he said belonged to his partner. A woman claiming to be the buyer’s sister arrived at the company’s premises and collected the items. However, payment had not been made, and when Ajay realised this, he filed a police report and made an insurance claim on behalf of the company.
The insurer declined Ajay’s claim because of the fraud exclusion, which stated that “loss caused by… any… false pretence practised on you” was not covered.
Ajay complained to the IFSO Scheme. The IFSO Scheme looked at the police report, which had classified the incident as “Obtaining by deception (Over $1,000)” and was headed “FB MP [Facebook Marketplace] Fraud $10,000”.
The IFSO Scheme found this was sufficient evidence that the items had been obtained by the buyer under a false pretence, and the insurer could rely on the exclusion to decline the claim.
“This was obviously not welcome news for Ajay, but is a good reminder for businesses to be wary of scams and to make sure they’re verifying payment before handing over any items,” Stevens says.
The IFSO Scheme resolves complaints about insurance and financial services, and its service is free for consumers. People can make a complaint to the IFSO Scheme at www.ifso.nz or by calling 0800 888 202.