NAB scam detection prevents $100m in potential losses

National Australia Bank’s move to payment alerts to its digital payment processes has saved customers from sending more than $100m to potential scammers in the past 15 months.

NAB, the nation’s second-largest lender, is still seeing higher numbers of overall scam reports from customers, but losses are down. Picture: NCA NewsWire / Glenn Campbell

National Australia Bank’s move to add “friction” to its digital payment processes, in the form of payment alerts, has saved customers from sending more than $100m to potential scammers in the past 15 months.

The bank, like its peers, is deliberately slowing down online payments in a bid to protect customers from scams and fraud.

NAB, the nation’s second-largest lender, is still seeing higher numbers of overall scam reports from customers, but losses are down.

Scam reports rose about 10 per cent between October 2023 and March compared to the same ­period the year earlier, while customer losses fell about 17 per cent.

Calls to its fraud centre from scammed customers, meanwhile, have fallen from 130,000 a month in 2022 to 70,000 a month, NAB group investigations and fraud executive Chris Sheehan said.

Implementing real-time payment alerts early last year has been one of the lender’s most ­effective strategies at stopping scams, Mr Sheehan said.

“Since we introduced that process in March last year, customers have fully abandoned $100m in payments,” he said.

“This tells me, almost certainly, that’s $100m in scam losses we’ve avoided because we put ­appropriate friction in place to slow the customer down and give them time to think about what they’re doing.”

These alerts target invoice, investment, romance and goods and services scams in the NAB app and internet banking, with customers typically receiving an alert if a payment appears out of character or raises scam concerns.

Blocking payments to certain crypto exchanges and removing links from text messages to customers had also reduced scam losses at the bank, Mr Sheehan said.

“We don’t block payments to every crypto exchange. We look at those exchanges where reports from customers tell us a proportion of payments turn out to be fraud or scams,” he said. “And once a certain threshold is hit, we just stop payments going to those exchanges in their entirety.”

Banks and super funds are taking action to protect customers from scams and fraud. Picture: iStock

The updated figures from NAB come days after the bank’s chief executive, Andrew Irvine, labelled scams a plague and warned on the impact of artificial intelligence on scam detection.

Scams and fraud were “the scourge of our times – it’s an absolute plague,” Mr Irvine said at a banking conference in Melbourne last week. “And unfortunately, I do feel that criminals are going to get more sophisticated. And the advent of capabilities like AI and generative AI are going to increase the threat vectors and the sophistication of the attacks.”

Each of the major banks has been ramping up detection and prevention against scams and fraud, as the government takes aim at fraud prevention at the banks, telcos and social media platforms.

Online scams can range from theft from merchants to romance and tax scams, as well as fraudulent investment schemes peddled on social media platforms.

They are believed to rake in trillions of dollars a year globally. Australians reported a record 600,000 scams last year, with losses topping $2.7bn, according to the Australian Competition & Consumer Commission.

As banks tackle scammers head on, super funds are tightening their own processes following warnings from Assistant Treasurer Stephen Jones in recent weeks that scammers would move down the chain to target workers’ nest eggs.

The Financial Services Council, which represents retail super funds, will on Monday bring in a new standard in which funds have a consistent approach in mitigating and dealing with scams and fraud.

The new standard for retail super funds puts in place multi-factor authentication on all high-risk transactions, among other requirements.

“With scammers becoming more and more sophisticated, the industry recognises it needs to be ahead of the curve when it comes to dealing with criminals,” FSC chief executive Blake Briggs said.

“The superannuation industry is responsible for over $3.5 trillion in retirement savings for Australians and FSC members take their duty to protect their customers very seriously. Although there are already mitigation measures in place, this industry-first standard provides our members with a consistent approach for dealing with scams and fraudulent activity.”

The standard is voluntary from July 1 until mid-2026, when full compliance is required. It covers retail funds but not industry funds.