‘Deception’: Banks slammed for $2.7b crisis

Cyndy’s family lost $1.1 million to scammers. But she was shocked to uncover how Australia’s big four banks had facilitated the crime.

A family who were caught up in a sinister scam involving three of Australia’s big banks have described the situation as “sickening” as they lost a staggering $1.1 million.

Cyndy, who asked not to share her surname, said her “typical boomer” parents sold their Sydney home of 30 years making a million dollar profit.

However, the couple who worked as an accountant and nurse, had risen from “incredibly poor villages” living in mountain shacks in Fiji to be the first from their families to put themselves through universities.

Her mum, aged 67 who is a nurse and a breast cancer survivor, and her 70-year-old dad were looking to enjoy their retirement.

Cyndy’s dad was investigating an opportunity to invest their house profits but instead it has turned into “devastation” for the family as they were caught in a bond investment scam.

“My dad is a certified practising accountant, he is well versed in finance, which is another thing that he was able to get scammed, it shows you the sophistication and complexity of these scams,” she told news.com.au.

Cyndy’s dad did his due diligence – checking details with the banking regulator, searching ASIC records, checking employee names on LinkedIn and he even showed the investment documentation to the branch manager of his own bank.

A Sydney family have seen $1.1 million lost in a matter of seconds after transfers were made. Picture: Supplied

Yet, he was still scammed.

He had transferred amounts of $800,000 and $300,000 to one of the big four and another lot of $300,000 – and despite a fraud alert freezing his account for this transaction, it later went ahead.

The family reported the incident to the police and Cyndy said they were shocked what was uncovered with banks failing to properly check identification when bank accounts were opened. One of the scammer bank accounts was opened via a photocopy of an expired foreign passport, she said police told her.

Cyndy has blasted the banks for being complicit in allowing scams.

“Australians don’t have anywhere to go. Right now the system is set up so that banks have all the power. They are knowingly funnelling money out of the country and contributing to the scams,” she said.

“The fact is that Australian banks are complicit in facilitating money laundering and perpetuating a crime against hard working Australians and primarily elderly Australians. No matter how educated people are and how they do their due diligence, they never had the capacity to check if that bank account was fraudulently set up.

“It infuriates me that banks blame people for falling for the scam — no this is a crime that has been facilitated by Australian banks on Australian citizens.”

The big four banks are increasingly under scrutiny for the way they handle scams. Stuart McEvoy/The Australian.

Cydny said her parents’ $1.1 million had clearly been sent overseas shortly after it hit the fraudsters account.

“They had a chance to change the trajectory of our family’s life and dad was putting his trust in the Australian banking system and then is going through that money being lost,” she said.

“Its hard to really put into words how much stress and sadness it has created and sadness that easily could have been avoided.”

She was scathing of the lack of transparency from banks.

“Banks are knowing that people lose this money and are never able to claim it back as there is no overarching way for those people to question and force the bank to show they hadn’t followed the correct procedures, unless they go through police or civil ligation,” she said.

“Most people who have lost their life savings can’t afford to do it. They know they can get away with it and won’t change the way they operate.”

Australians lost a massive $2.74 billion to scammers in 2023. Stuart McEvoy/The Australian.

It comes as a growing chorus of voices are calling out Australian banks handling of scams. The billion dollar profit machines have been slammed for their response when customers fall victim to scams in an issue that has been described as a “crisis”.

Australians lost a massive $2.74 billion to scammers in 2023 – that’s hundreds of dollars for every household where people are already under pressure from cost-of-living woes.

More needs to be done by banks to protect scam victims, new polling has revealed.

Nine out of 10 Australians believe that scams are becoming more sophisticated and that anyone and everyone can become a victim, however careful they try to be – the new polling showed.

It also found 75 per cent of Australians expect banks to keep their money safe from criminal scammers, and if they fail, to return it to their accounts.

Consumer Action Law Centre CEO Stephanie Tonkin. Picture: Supplied

Consumer Action Law Centre CEO Stephanie Tonkin said she wasn’t surprised by the findings.

“Instead of accepting responsibility, our banks pile on the injustice, and blame their customers who pay them to keep their money safe from increasingly sophisticated crimes and deception,” she said.

“88 per cent of people polled, and 91 per cent of over 55’s believe the sophistication of these crimes means anyone can become a victim. Almost every Australian is now fearful their money is going to be stolen because their banks are not doing enough.

“The onus continues to be on the customer to avoid being scammed against malignant forces over which they have no control, and its exasperating banks offer little to reduce scams to keep people’s money safe and secure.”

Many banks only reimburse a paltry 2 to 5 per cent of money that is stolen because of fraud, despite astronomical profits recorded by banks year in year out.

“The stance of our banks to this crisis is simply immoral, and I am calling it out,” Ms Tonkin added.

In May, the Commonwealth Bank of Australia reported a profit of $2.4 billion for the six months to end of March, while Westpac’s half-year profits stood at a staggering half-year $3.34 billion.

Meanwhile, ANZ reported a $3.55 billion cash profit, while NAB raked in $3.5 billion.

According to the poll results, 76 per cent of people agreed that if the law forced banks to reimburse scam victims, this would act as a good incentive for them to invest in technology to prevent scams.

The United Kingdom has introduced world-first laws that forces banks to compensate scam victims as an incentive to drive down losses and increase investment in detection and prevention.

Australians want to see laws to force banks to refund customers who have been scammed. Picture: iStock

Under the UK scheme, customers will be paid back within five days – with both the sending and receiving bank responsible for the loss. Customers rare only denied if they have acted fraudulently or with gross negligence.

But there has been strong resistance in the Australian banking system to introduce a similar scheme with the Australian Banking Association claiming it would create a “honeypot” effect and encourage criminals to target Australians more often.

Polling found 75 per cent of Aussies believe the government should introduce laws to force banks to refund customers who have been robbed via scams.

Financial Services Minister Stephen Jones said last year a tough new code of practice for banks was being developed.

The Albanese Government is planning to introduce scam legislation into parliament soon, which it claims will set a very high bar for banks and companies to prevent scams.

But Australians are sceptical. Less than one in three people believe the country is on track to have the best anti-scam legislation in the world, the poll found.

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Originally published as ‘Deception’: Banks slammed for $2.7b crisis