Banks to join forces to tackle rising scams

The Australian Competition and Consumer Commission (ACCC) has allowed the Australian Banking Association (ABA) and its member banks to come together to create an industry standard to prevent, detect, and disrupt scammers.

“A coordinated response across government, law enforcement, and the private sector is essential to effectively combat scams that are evolving rapidly and with increasing sophistication,” ACCC deputy chair Catriona Lowe said.

Scammers robbed Australians of more than $3 billion last year – an 80% year-on-year increase and an average of nearly $20,000 per person.

The competition watchdog’s tick of approval could see the big four banks, as well as the likes of AMP, Bendigo Bank, and Macquarie Bank unifying their approach to the criminals.

“The proliferation of scams is causing significant detriment to consumers and businesses alike, and the banking sector has a key role in combating scams and recovering losses,” Ms Lowe said.

Many of the major banks have made notable changes to better protect customers from scammers in recent times.

Commonwealth Bank, for instance, has partnered with Telstra to develop the ‘Scam Indicator’, designed to detect high-risk scam indicators in real time.

Meanwhile, Westpac will block suspect cryptocurrency and online transactions and NAB’s alerts stopped more than $270 million concerning payments between March and July.

“Australian banks have been working hard on initiatives they can each take to help keep Australians safe from the scourge of scams,” an ABA spokesperson told Savings.com.au.

“The ACCC’s authorisation will allow banks to focus on more collective initiatives to prevent and disrupt scams, as well as work with telcos, social media and crypto platforms on initiatives those industries can take to stop scams at the source.”

Reimbursement a tricky topic

Challenges arise when it comes to authorised payments that turn out to be scams, as ABA CEO and member of the National Anti-Scam Centre advisory board Anna Bligh told the Savings Tip Jar podcast in June.

“There is a distinction to be made between what the industry would describe as a fraud versus a scam,” Ms Bligh said.

“If the customer has not authorised the payment and had no place in money disappearing from their account, the banks would regard that as a fraud.

“What we would term a scam is where the customer has themselves authorised the payment.”

Banks will typically reimburse a customer who has been a victim of fraud, but won't necessarily do so in cases of scams.

According to the Australian Securities and Investment Commission (ASIC), while 96% of scam victims were bank customers, banks stopped just 13% of scam payments and reimbursed 2% to 5% of victims.

Regulators in the United Kingdom recently put forward new legislation forcing banks and payment providers to reimburse scam victims who sent money to criminals.

There have been calls for Australia to follow suit in a bid to encourage banks to better protect customers against scammers. But the topic is complex.

“Remember, the money that banks have is your money,” Ms Bligh said.

"It's the money out of your deposit account.

“So, if we had a system where banks used your money to reimburse every customer that had authorised a scam payment, I think we'd end up with some real problems in the system.”

At a parliamentary hearing in July, major bank executives said scam compensation creates a moral hazard.

"Making the banks pay for it does not solve the problem, it just moves the problem somewhere else," ANZ CEO Shayne Elliott said.

"Nobody wants to be the underwriter of scammers," CBA deputy chief David Cohen said.

"There has been a pretty significant uptick in scams in the UK since 2019, which is when the voluntary code started.

"They've had about a 250% increase in scams since then. Australia, in the same period, has had a 33-34% increase in scams."

Advertisement

Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest interest rates on the market.

Image by WayHomeStudio on Freepik