OPINION: Banks, get tougher on scams
An edited version of this opinion piece appeared in the Herald Sun 18 February, 2023
You’d be hard-pressed these days to find someone who hasn’t been the target of a scam. Whether it’s a fraudulent text message, a fake invoice or a phishing phone call, everyone is at the receiving end of increasingly sophisticated and well-disguised attempts to separate us from our money. We constantly speak to people falling victim to scams through our frontline services .
For those who fall prey to a scam, the impacts can be horrendous. Apart from the obvious financial devastation, people experience stress, relationship breakdown, mental health issues and lasting feelings of guilt and shame.
Our financial counsellors speak to elderly people who have lost their retirement savings to a scam; they hear from people with cognitive impairment who unwittingly transferred vast sums to scammers. They hear from isolated people who realised all too late that they had been groomed into handing over money as part of a romance scam.
While it’s easy to point the finger and blame the victims, the reality is that many scams today are so elaborate, so psychologically complex, that any of us could fall prey. The stigma around scamming means that it is grossly under-reported, believed to be around 13% of actual cases. Even so, the Australian Competition and Consumer Commission estimates that last year, scam losses in Australia reached $4 billion, or $11 million a day.
Despite scams now being so widespread, our banks continue to shift the onus of responsibility for stopping scams to their customers. Sometimes the banks might offer to reimburse their customers, but in the vast majority of cases, banks refuse to reimburse the money lost. Customers who refuse to accept this state-of-affairs and lodge a complaint with the Australian Financial Complaints Authority (AFCA) will find that only around 5% of cases have a favourable outcome for victims. It’s clear that our system needs urgent reform.
So what can be done to detect and prevent scams before they wreak havoc on people’s lives?
Firstly, our banks need to urgently invest in better systems and technology to stop scammers in their tracks. In a welcome move, earlier this month, the Commonwealth Bank announced it would be introducing NameCheck technology to its online payments from March, which is aimed at limiting the ability of scammers to issue false invoices. It’s vital that all banks follow suit to ensure the online payment environment is more secure.
The banking sector also needs commit to reimbursing customers who have been tricked into a scam. Mandatory reimbursement would provide an incentive for banks to take meaningful action on this escalating criminal behaviour. It would even be good for business; banks will have better systems to protect their customers, lower the rates of scams and will spend far less money on customer complaints handling.
Right now, Australia is a soft target for scammers. Let’s make our country one of the hardest jurisdictions for scammers to operate and let them focus their energies elsewhere.
Media contact: Mark Pearce, Media and Communications Adviser, 0413 299 567, email@example.com