Victim Support says banks wrong to blame scam victims

Sunday, 25 February 2024

National charity Victim Support says banks are victim-blaming people defrauded by professional scammers.

“At Victim Support, we observe fraud victims being blamed by their banks, those in the justice system, family, friends, even strangers on social media,” said Dr Petrina Hargrave, general manager strategy and advocacy at Victim Support.

“Victim blaming occurs when the victim of a crime is held entirely or partially responsible for the harm they experienced, rather than the blame being placed where it belongs: on the person who caused the harm,” Hargrave said.

Victim Support is providing support to scam victims who have been fighting for compensation through the Banking Ombudsman scheme, several of whom have been told they are responsible for a sizeable part of their losses.

Scam victim Borja Ares said Victim Support was supporting his challenge to a preliminary decision by Banking Ombudsman Nicola Sladden over how much compensation the Bank of New Zealand (BNZ) should pay him after it missed “red flags” that should have alerted it to the likelihood that Ares was being defrauded in May last year.

However, the Banking Ombudsman Nicola Sladden decided BNZ should pay Ares compensation for just 70% of the money lost in an investment scam when he was manipulated by criminals pretending to be from Citibank.

Sladden said the steps he took to protect his own interests were not thorough enough, and that it was only “fair and reasonable” he shoulder some of the loss.

Ares believed he was being blamed “by default” for falling victim to sophisticated criminals, and said the preliminary ruling reinforced the stigma scam victims were fighting hard to get rid of.

“It perpetuates the standard of victim blaming so common within the banking industry, a standard society has moved away from a long time ago, yet so accepted within this industry that they don’t feel ashamed by upholding it,” he said.

Hargrave said: “The idea of victims having contributory negligence in bank fraud is tantamount to victim blaming.”

“Do we say that victims were negligent because they let someone buy them a drink that was then spiked and they were raped, or that they were negligent for walking home alone at night when they were assaulted? Crime happens because of criminals, not because of victims.”

And, she said: “Scams are becoming so sophisticated that everyday people going about everyday activities don’t realise until it’s too late. If banks can’t spot a scam, why do we assume victims will?”

Sarah Parker, deputy banking ombudsman, said the ombudsman would consider the points made by the scam victims and Victim Support.

However, she said: “The current standard in New Zealand is that customers are responsible for ensuring the legitimacy of who they are sending funds to, but banks may be responsible for some or all of a customer’s loss if they fail to act when there were warning signs their customer was being scammed.

“In the circumstances of a particular case where the bank has failed to act on a warning sign, it may be fair for the loss to be apportioned between the customer and the bank,” she said.

But Hargrave said: “New Zealand’s response to fraud victims lags behind other countries. New legislation in the UK will entitle victims to a refund from banks if they have been defrauded by authorised push payments,” she said, something Consumer NZ was calling for.

By contrast to the UK law, the circumstances in which banks will, or will not pay compensation in New Zealand is set out in the Code of Banking Practice, written by the New Zealand Banking Association, the political lobby group for banks.

Sladden supports a call by MPs on Parliament’s Finance and Expenditure Select Committee for the code to be reviewed, though scam victims want the government to step in and set minimum legal protections, rather than let banks continue to self-regulate.

Banks have pledged to improve their fraud defences after weaknesses were exposed when a network of scam victims started sharing their stories publicly.

New Zealand Banking Association Te Rangapū Pēke chief executive Roger Beaumont said: “Banks are often at the end of a chain of events that makes up a scam, which could have started with fake websites, emails, texts or phone calls. Liability for any losses depends on what happened.”

Accusations that banks have been engaged in a campaign to convince the public they, and not their banks, are primarily responsible for protecting themselves from scams began with the launch of a bank-funded TV series fronted by Nigel Latta in June.

Retired banker Janine Starks, who is doing pro bono work to help scam victims, wrote at the time: “Banks are using Latta’s educational talent to extend the narrative that consumers, not banks, hold the liability for sophisticated payment crimes.”

Ares said that narrative continued with ASB launching a TV and internet advertising campaign depicting a couple humorously modelling the right behaviour when faced with someone seeking their personal information, though the bank says it is just trying to grow public awareness.

The scale of the fraud-wave hitting the country is unknown, however, the Ministry of Business, Innovation and Employment said last year that just under $200 million was lost to scams at 11 of New Zealand’s largest financial institutions.

Kiwibank chief executive Steve Jurkovich said that was just “scratching the surface”, and the true scale of the losses might be as much as double, as many victims were too embarrassed to say anything.

“Victim blaming is a real disincentive for fraud victims to seek justice,” Hargrave said. “There needs to be widespread education about victim blaming in fraud cases, across all agencies that interact with victims and across society,” she said.

“Last year’s New Zealand Crime and Victim Survey showed the proportion of adults who experienced fraud and deception had almost doubled, but only 6.5% of fraud and cybercrime was reported to police,” she said.

It should not require courage to report a crime, but it currently did, she said.

“People like to think cybercrime victims are technologically challenged or gullible, but we support victims who are intelligent, computer-savvy, careful people.

“It’s a deeply personal crime because victims are often blamed, then turn the blame on themselves, so it changes how they view themselves and it can destroy relationships. We’ve seen fraud victims fall into really dark places.”

Research soon to be published by Victim Support would show the terrible effects of people feeling blamed for the crimes committed against them, including doubting and blaming themselves, losing trust in others, becoming isolated from their usual support networks, and often being too fearful or ashamed to take the next step of reporting the crime and seeking help.

“Being blamed changes people; we had people in our study who were previously quite open and social, who became almost ghosts of themselves, keeping problems to themselves and closing down around others,” she said.