Scotiabank iPhone App Bug Causes Loss Of Interac Money Transfers?

Update 1: Scotiabank Media Communications contacted us with the following:

Scotiabank manages all transactions for our iPhone services and the information is not shared with any third party.  At Scotiabank we take the security and privacy of customer information very seriously.  Our mobile banking service is protected by the highest security standards that allow us to offer a mobile security guarantee.

Last year, Scotiabank released an iPhone app that allowed users to access their Scotiabank accounts and manage various activities through their iPhone or iPod touch. The app is great and very convenient, and I have been using it since its release, but mostly just to see my balances.

Well, if you have the app and are using it for monetary transactions, you may want to think twice. Online finance already has its concerns and this next story will just add to those worries.

Money Transfer Gone Bad

In October 2010, the Scotiabank app was updated to allow users to do money transfers through the app. Well, a user of the Scotiabank app recently had his interac money transfer lost while using the app to conduct a money transfer! The user sent a $700 money transfer via the app and then learned that the $700 never arrived to the intended recipient!

Furthermore, the money transfer transaction did not even show up on the official Scotiabank website, yet the funds were clearly deducted as per the overall balance. In other words, it is as if the transfer never took place and the $700 mysteriously vanished!

Third Party Company?

As expected, the user contacted the Scotiabank call center and while speaking to a “senior CSR” was told that it will take three business days to have the funds returned. Disturbingly, the reason for the delay was attributed to the Scotiabank app being managed and developed by a third party company and not Scotiabank themselves!

In an attempt to expedite the process, the user was offered $700 from Scotiabank’s “emergency funds replacement program”, but these funds could only be used for 24 hours at which point they would be deducted. This would still leave the user having to wait at least two more days to get the original $700 back, if at all!

Thinking Twice

Up to this point, I have not heard of any major negative experiences with finance-based iOS apps but this story terrifies me, especially since I use the Scotiabank app. However, what really disturbs me is the idea that a third party controls the app!

If it is true that the Scotiabank app is in fact managed and developed by a third party, that raises some serious security concerns, as some random third party company has full access to transfers, transactions, and accounts. Even worse, transfers seem to be out-of-sync with Scotiabank’s own systems!

While you should always be careful when conducting financial transactions online, this story has made me think twice about using services or apps that are not directly managed or controlled by the official parent company.

[iPhone World]

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