Scam victims seeking redress from banks are in ’a lottery’

Scam victims who have authorised payments to fraudsters confront inconsistent policies of redress among banks.

Scam victims have hit and miss experiences with their banks when they seek help and financial redress for payments they have authorised.

The banking industry has pledged to improve its treatment of scam victims after Australians lost a record $205m to conmen in just the first four months of this year but consumer groups say getting money back when the crimes are deemed authorised transactions is like “a lottery”.

“We’re starting to see scam victims as a new cohort of vulnerable customer,” Christine Cupitt of the Australian Banking Association told a Law Council of Australia seminar in Sydney.

Consumer Action Law Centre chief executive Gerard Brody however said victims who had authorised the transactions in scams were “not necessarily getting a good outcome when they contact their bank and ask for help or a refund”.

“It feels a bit like a lottery about whether you get re­imbursed from your bank or not,” he said.

Victims had told the centre some banks would refund 50 per cent of the loss, while others could go to 75 per cent if they decided a customer was in the “vulnerable” category.

“In many instances, there’s no refund at all,” Mr Brody said.

He disputed that many transactions were actually authorised, given “the consumer is often under the influence of a scammer when they’re making that transaction”.

In cryptocurrency and romance scams, for example, a position of trust had been developed over time with the scammer. “Once someone has developed that trust, it’s really hard to convince them it’s wrong,” he said.

“We need to have a shift in where the liability sits in terms of authorised bank transfer scams, that banks should take a greater share of liability and then they are incentivised to invest in protection and detection measures.”

According to the ACCC’s Scamwatch, Australians lost $205m up to May, 166 per cent up on the same time last year.

Multiple agencies are working on the problem and the federal government said before the election it would establish a nat­ional anti-scam centre to bring together law enforcement, banks, telecommunications providers and consumer advocates to fight the problem.

ASIC deputy chair Sarah Court.

Australian Securities & Investments Commission deputy chair Sarah Court told the seminar the agency recognised financial services firms were “very often the vehicles through which scams were facilitated”.

As part of its response, it was looking closely at the practices and procedures of the big four banks, with a view to working out a best practice model for handling scams.

Ms Cupitt said bank customers unsatisfied with their treatment could go to the Australian Financial Complaints Authority to make a binding decision about compensation. She said banks recognised a “very clear responsibility to take even greater steps to identify, detect and prevent scams and in certain situations to try to reimburse customers for some of the scam losses”.