ANZ filters sent banking ombudsman anti-fraud email to spam

Tuesday, 6 February 2024

ANZ didn’t get the Banking Ombudsman’s recommendations on how to protect customers from scams because the bank’s email system identified it as spam.

In March last year, ombudsman Nicola Sladden, who has been pushing banks to improve their fraud protections, sent a “practice note” on fraud to banks setting out what she expected from them.

But a preliminary decision on the case of a woman who lost $300,000 in April last year to scammers revealed ANZ didn’t see the ombudsman’s advice because it got sent straight to the bank’s spam folder.

Scam victim Jo Hurley complained to the ombudsman that ANZ should have identified she was being defrauded by scammers posing as Citibank employees offering term deposits, as the Financial Markets Authority Te Mana Tātai Hokohoko (FMA) had warned about the Citibank scam in July 2022.

ANZ acknowleged it knew about the Citibank scam at the time Hurley was conned. However, the ombudsman said ANZ did not breach its duty to provide banking services with reasonable care and skill to Hurley, despite its anti-fraud system apparently not being set to scan to for customers entering variations of the name Citibank when making electronic transactions.

In a letter to Hurley, Sladden said it was beyond her powers to review the parameters of banks’ fraud detection systems.

Hurley made the payment electronically, and at no point did she mention the word Citibank to one of ANZ’s staff, Sladden said.

Responding to the preliminary decision, ANZ said in a statement: “We take our response to scams and fraud very seriously. ANZ has a fraud monitoring system and currently a team of more than 100 detection analysts and fraud investigators in place to attempt to identify suspicious activity on customer accounts and help try to protect customers from scams. We stop many regularly.

“Being generally aware of a particular type of scam going around (via email or other means) does not mean a bank is aware a specific customer is being defrauded.

“ANZ has a team of fraud analysts updating our fraud detection algorithms to attempt to identify transactions that meet certain fraud or scam criteria,” the bank said. “In our experience, monitoring specific references details is not an effective preventive measure against scams.”

In two recent cases, the ombudsman did find that Bank of New Zealand (BNZ) was liable to pay around $217,000 to compensate two scam victims who had told bank staff they were investing with Citibank.

Banking expert Janine Starks said that set up the ludicrous situation that people who made payments electronically through banks had lower protection than those who made transactions with the help of staff.

Writing to Hurley, who was too upset to speak to The Post, Sladden said, “ANZ told us that it regularly monitored media reports and regulatory updates about scams and frauds. It therefore knew about the Citibank scam from the Financial Markets Authority’s publicwarning on its website in July 2022 and media reports at the time about the scam.

“We emailed banks about investment scams on March 14, 2023. ANZ did not receive this email because it was caught in its spam filter.”

In that month, Sladden had recommended banks provide “clear warnings to customers considering transferring funds for a term deposit”, provide training scripts to frontline staff, and review warnings on their websites, internet banking and app pop-ups.

The Government has remained coy on scams so far, despite calls from the banking ombudsman that law reform is needed to better protect the public.

Sladden has urged banks to follow UK banks in putting “confirmation of payee” systems in place to check that the account names and numbers match before allowing payments to go ahead.

But the ombudsman told Hurley that “in the absence of any legislative or regulatory framework, or obligation to monitor transactions to detect scams, we cannot compel banks to have certain fraud detection systems.”

Starks said the Banking Ombudsman scheme, which was originally created by banks as voluntary “self-regulation”, should be reviewed, including giving the FMA power to appoint its board.

Banks have promised to bring in a confirmation of payee system, but have set no deadline for that to happen.