'About time!' Victims react to banks' plan to tackle scam crimewave

Friday, 15 September 2023

Banks have bowed to public pressure to do more to protect customers from financial scams.

Big banks say they will now work together to fight the fraud crime wave sweeping the county.

New Zealand has been hit by an unprecedented crime wave of overseas scammers trying to defraud people, with the estimated number of fraud and deception crimes having risen to 510,000 from 288,000 the previous year.

It has left the public angry with banks, who they say are not doing enough to protect them.

Carla O’Neill, a real estate agent who fell victim to a fake term deposit scam, said, “it looks like finally some action is being taken. About time”.

But it had come too late for her, she said.

Borja Ares, a second scam victim, said he was happy with the move, buy bank had taken too long to act. “There has been so much loss and suffering.”

A new scam has already costs Kiwis millions in two weeks, Cert NZ's incident response manager tell you how to avoid becoming a victim. (First published February 2023)

Banking Association Te Rangipū Pēke chief executive Roger Beaumont said banks had agreed to work to create an industry-wide “confirmation of payee” account name checking service.

Currently, banks do not check to see whether account names and numbers match on payments, which is a crack in their systems that has been long-known, and which is being exploited by scammers.

O’Neill said customers making payments have to fill in the account name and number when making a transaction, which left them with the “misleading” impression banks were checking.

“You assume it’s being checked, but it’s not,” she said.

A Horizon poll earlier this month found 83% of people thought banks should be making such checks to keep their customers safe.

“They’ve been making record profits. Why haven’t they been investing money in their systems to protect their customers. That doesn’t make any sense,” O’Neill said.

Beaumont said banks were committing to removing all web links from texts to customers.

Scammers have been sending fake texts purporting to be from banks.

These contain weblinks to fake bank websites which they use to steal people’s banking login credentials.

Banks would also work together to combat mule accounts, and would investigate freezing mule accounts, which were used by fraudsters to transfer stolen funds, Beaumont said.

‘The industry will work closely with the Banking Ombudsman to support a more consistent and timely response to customers who have been scammed’, says Banking Association chief executive Roger Beaumont.

A money mule is a term used for someone who transfers, or moves illegally acquired money on behalf of someone else.

O’Neill criticised banks for their failure to protect customers from money mules.

“They don’t even check the criminal records of new customers,” she said.

“When a mule goes to open an account at a new bank, they don’t even check whether they have been convicted of money laundering in the past, which is bananas.

“We know more about our mules than the banks do. It’s ridiculous, and they’ve all been involved in money laundering in the past.”

Beaumont also promised “more consistent and timely outcomes for customers who suffer financial losses”, and would work with the Banking Ombudsman.

Currently, customers who are scammed often find their banks telling them they are at fault for their own losses, and referring them to the Banking Ombudsman.

Borja Ares is a victim of the Citibank investment scam, and is calling for action from politicians.

Ares said banks needed to be made liable for failures that contributed to scam victims losing money.

The Horizon poll showed that a majority of the public agreed that if banks missed “red flags” that should have alerted them that a customer was being defrauded, they should pay compensation to them.

He expected it to have a positive impact in tackling fraud and scams, but he said, the banking industry could not address this issue in isolation.

He said the banks would support the establishment of an anti-scam centre, similar to the one in Singapore to provide a centralised and co-ordinated multi-sector approach to fighting scams, he said.