Customers should not bear the brunt of scam losses

Australians lost more than $2 billion dollars to scams last year. The digital nature of these criminal operations, which often traverse physical borders and legal jurisdictions, are particularly challenging for authorities.

The sophisticated methods employed by scamsters mean even the most savvy of consumers can be ensnared, as we detail in our report today on the hundreds of HSBC customers who had money siphoned from their accounts through an elaborate and extended scam.

Many of the victims of these scams have lost considerable amounts of money – their life savings in some instances – and very few will have this money returned to them.

Australians lost more than $2 billion last year to scams.Credit: Getty Images

Data shows of the more than $500 million lost in scams by Australians through the Big Four banks only $21 million was paid in compensation.

Our report reignites the debate around whether Australian banks should play a greater role in scam prevention and have a greater level of responsibility for losses incurred by their customers.

The British parliament last year passed legislation that makes UK banks legally liable to reimburse customers within five days if they are victims of scams on their platforms. Authorities say there has been a decline in scams successfully targeting banks as a result.

In this country, consumer advocates have been calling for Australian banks to be compelled to have the same level of legal liability, rather than scam victims carrying the loss themselves.

They say both cyber platforms and banks have the financial resources and the technology to analyse for red flags and the best way to prevent scams is to financially incentivise banks to invest in detection and prevention technology.

Local banks have been making steps to increase their customer protections, beginning work on a new accord last year to create a set of industry-wide anti-scam measures.

The Scam-Safe Accord’s key plank is a new confirmation of payee system which the industry says will help reduce scams by ensuring people can confirm they are transferring money to the person they intend to. The Scam-Safe Accord also includes a major expansion of intelligence sharing across the sector.

Meanwhile, the federal government is working on a scam code framework which it says will raise the bar for banks, telcos and social media platforms when it comes to preventing scams.

Financial services minister Stephen Jones, the minister leading the federal government’s scam protection reforms, says the framework will ensure these organisations do more to detect and disrupt scams, as well as improve dispute resolution.

Jones has so far stopped short at heeding calls from victims and consumer groups to introduce laws similar to those of the UK which would ensure victims of bank scams in Australia are reimbursed.

He says he doesn’t see a good argument for making banks fully liable for scams when social media platforms or telecommunications companies may have played a bigger role in the facilitation of the crime.

While new accords and codes are all welcome initiatives, they provide little comfort for those who have lost significant sums of money.

Banks and other payment providers are well placed to identify signs of scams. The initiatives to increase protection from online scams needs to be fast-tracked and should include a full exploration of the merits of adopting similar legislation to the UK.

While there may be divergent views on the best tactics to fight the ‘pandemic of global scams’ we have reported on today, there can be no dispute that scam victims should not be bearing the risk – and the resulting financial impact – on their own.