NZ bank customers more exposed to fraud than Aussies

Sunday, 2 July 2023

In his new series, Nigel Latta investigates the eight main types of scams.

ANALYSIS: New Zealand banks lack some of the anti-fraud technology their Australian parents have been rolling out on the other side of the Tasman.

Banks gathered on Wednesday night at TVNZ for a preview of Nigel Latta’s You’ve Been Scammed, a four-part TV series that looks at how criminals prey on human weaknesses.

Banks helped fund the series, which is supposed to educate the public on how to spot scams, and avoid falling victim.

But several high-profile anti-fraud initiatives by Australian banks have not been matched yet at their subsidiary banks in New Zealand, despite new Ministry of Justice crime data showing in a single year the annual number of fraud and deception crimes had risen to 510,000 from 288,000.

These initiatives include one-time “dynamic” CVC numbers for credit card transactions, which Westpac in Australia says has cut credit card fraud by 80% for users.

It also includes account name and number matching introduced by Commonwealth Bank of Australia (CBA), the owner of ASB.

New Zealanders have been subjected to a tsunami of scam and fraud attempts, including scam texts claiming to be from banks or government departments like Waka Kotahi.

You've Been Scammed by Nigel Latta aims to teach us how to not to be scammed.

They have also been targeted with fake investment services advertised through Google adverts.

But New Zealand’s lack of technological fraud protections could be making it a soft target for international crooks.

Google’s failure to add New Zealand to the list of countries where it operates an advertising verification scheme designed to prevent fake investment ads was discussed by guests at the Latta screening.

Also discussed was the unknown scale of fraud losses, though greater transparency could be on the way.

Banking Ombudsman scheme chairperson Miriam Dean told the audience: “Banks estimate that 25,000 New Zealanders have been scammed in the past 12 months, although that figure… is unquestionably conservative.”

Financial criminals are placing their adverts through Google to lure unsuspecting victims to their fake investment sites. In some other countries Google has created an anti-scam advertising scheme to stop it from happening, but has no immediate plans to do the same in New Zealand.

Banking Ombudsman Nicola Sladden said banks had told the ombudsman scheme their customers lost $183.5 million to scams between October 2021 and September 2022, a 40% increase on the previous year.

Australia is much more systematic than New Zealand in trying to quantify, and report, scam losses.

The 2022 Targeting Scams report from the Australian Competition and Consumer Commission (ACCC) said the combined losses reported to scam agencies in the country was at least A$3.1 billion in 2022, somewhere in the region of A$120 per Australian citizen, though it said that would not capture all scam losses.

There’s no such comprehensive report in New Zealand, and the $183.5m reported by banks to the Banking Ombudsman only equated to $36 for every person living in New Zealand.

ACCC deputy chairperson Catriona Lowe highlighted the importance of the likes of banks putting in place systems to protect their customers. “Losses are increasing because scams are harder to spot, and anyone can be caught.

“We need solutions that stop scammers reaching consumers and makes it harder for them to get access to money from the bank accounts of ordinary Australians,” she said.

Investor presentations by Australian banks on the ASX Australian sharemarket show that the things they choose to invest, or not to invest in, have a real impact on fraud losses for their customers.

National Australian Bank, the owner of Bank of New Zealand (BNZ) told investors in May it was accelerating its Australian efforts to protect customers against scams and fraud.

In the first half of the 2022 year, there were 800 scam cases affecting Australian customers per month, but that had doubled to 1600 by the first half of 2023 financial year.

NAB was able to cut ‘spoofing’ cases by half when it worked with telecommunications companies to reduce the volume of scam calls and texts its customers were getting.

It had added 50 full-time positions to its Australian investigation and fraud team, which was now 450-strong, and claimed to have “prevented and recovered more than A$155m in scam losses” for Australian customers in 18 months to the end of March.

Just how crucial banks were in protecting customers was shown by the work it had done with telcos to limit “spoofing”, which had seen spoofing scam cases drop by 50%.

Spoofing is a process fraudsters use to appear to be calling or texting from a different number, such as that of a bank.

BNZ is less transparent than NAB, and Ashley Kai Fong, the bank’s head of financial crime would not reveal the size of its fraud team here, but did say the bank was recruiting to grow its financial crime team by 36%.

“Over the past 18 months, BNZ has prevented and recovered approximately $75m in losses for our customers, inclusive of credit card fraud, with credit card fraud accounting for most of this figure.”

Australian bank presentations also sometimes publish how much fraud they prevented, but not how much actually happened.

Like NAB, BNZ was using pop-ups to alert customers to potential fraud activity.

Unfortunately, scammers have been sending texts claiming to be from banks, including BNZ, attempting to trick bank customers into thinking they are real alerts.

ANZ’s most recent ASX investor presentation said one of its “measures of success” was reducing customer fraud losses, but did not publish data to show how it was doing.

ANZ in New Zealand would not share its fraud loss and prevention data, but hinted more transparency could be on the way.

“ANZ is working with other banks presently to build industry level reporting of fraud and scam data with Payments NZ,” a spokesperson said.

The CVC number, or security code, is printed on the back of credit cards.

It did, however, reveal that around 70 in every 100,000 transactions were fraudulent.

The ANZ spokesperson said the bank was investing “significantly” in fraud detection systems, and planned to be launching the “latest biometric technology” next year.

Biometric technology includes things like facial recognition, but can also include being able to recognise people’s typing patterns.

In Australia, ANZ and Westpac have launched “dynamic CVC” numbers for credit card payments through their banking apps, which has slashed credit card fraud.

Traditional credit cards have a CVC number (sometimes called a security code) printed on the bank, which needs to be entered to authorise online transactions.

Dynamic CVCs are unique numbers generated to authorise only a single transaction.

Westpac had no plans to bring dynamic CVCs to New Zealand, but said it had other protections in place.

Both Westpac and CBA in Australia are now checking that account numbers and names match for payments.

That can identify instances of when people think they are paying money to a legitimate account, for example, a government department, when the account number does not belong to the named payee.

Westpac said it did not do account name and number checking in New Zealand, but its “real time blocking of potentially questionable online merchants had saved $131m for 1.54m customer incidences since January 2022”.

ASB, the subsidiary of CBA, said the best way to introduce a name check service in New Zealand would be through an industry-wide initiative, like the scheme launched several years ago in the United Kingdon.

A project by Payments NZ, which is owned by the major banks, could see this happen here sometime.

“We are very supportive of Payments NZ’s work to scope this for New Zealand and are advocating for this to be implemented, and jointly funded by all banks,” an ASB spokesperson said.