Banks’ scam code ‘hollow gesture’ to protect themselves, scam victim says

Sunday, 11 May 2025

Borja Ares is a victim of the Citibank investment scam.

OPINION: As a victim of a scam that lost everything, I watched with cautious hope when the New Zealand Banking Association (NZBA) announced five new measures to combat scams and compensate victims.

That hope has turned to frustration.

These measures, set to be fully implemented by November, 2025, are vague, inadequate, and seem designed to protect banks rather than people.

New Zealand’s weak systems make us easy targets, and the banks’ response feels like another hollow gesture to dodge accountability. The banking system seems to be changing something, but in reality they change nothing, ultimately avoiding regulation, which seems to be enabled by a relaxed authoritative system.

A nation targeted, a system exposed

Scams are a growing epidemic in New Zealand. In 2024 alone, Kiwis lost over $200 million to scams, with some estimates suggesting one in five New Zealanders has been targeted.

Authorised payment scams, where victims are tricked into transferring money to fraudsters, are particularly prevalent, making up a significant portion of the complaints reported annually.

These are not just numbers. They represent shattered lives, like mine, where hard-earned money vanished in moments due to sophisticated criminals exploiting outdated banking systems.

The international humiliation is palpable. New Zealand’s banking sector has been exposed as lagging countries like the UK. Our banks’ inaction has made us a soft target, tarnishing our reputation as a safe, modern economy.

A cycle of empty promises

Every now and then, the faulty system is exposed to the eyes of the public which is then forced to operate in damage control where banks make some empty promises to alleviate the pressure. If questioned, the banks would merely complain about the hardships of implementing their forced changes.

For years, this simple trick worked. People are too busy, life is too fast, and memories are too short. Yet, the cycle of self-regulation continues, with banks promising change only when forced and never or barely delivering.

The NZBA’s new measures - Confirmation of Payee, pre-transaction warnings, high-risk transaction monitoring, a 24/7 scam reporting channel, and sharing scammer account information - sound promising on paper.

But under scrutiny they are vague, lacking enforceable standards, and leave gaping loopholes that allow banks to maintain their bad practices.

Take the $500,000 reimbursement cap for authorised payment scams. It’s not guaranteed. Victims like me can be denied compensation if we “ignored warnings” or failed to exercise “reasonable care” - terms so broad they could apply to almost anyone.

The banks’ history of blaming victims, as I experienced in a dismissive letter from my bank to the Banking Ombudsman, shows they are more interested in avoiding liability than helping their clients.

Banks dragged kicking and screaming

The banks did nothing meaningful until public pressure and government threats forced their hand. The disrespect the banks displayed for the victims is evident in their lack of transparency and refusal to engage with us.

The NZBA’s measures were developed behind closed doors, with no public consultation or input from victims. This is not just poor practice. It is undemocratic. The voices of ordinary Kiwis, the very people these measures are meant to protect, have been ignored by both the banks and the Banking Ombudsman.

The measures themselves are a master class in obfuscation.

The Confirmation of Payee service, for example, so far, has proven to be a disaster.

When I share my bank account using my banking app, the name they offer for my account will produce a “No match” warning.

If I pay someone from my payee list, I will not get any kind of confirmation of payee. As for now, the system is only teaching people to disregard the warnings, thus making it a disservice to customers.

Pre-transaction warnings sound good, but what is available to stop banks from issuing generic, easily ignored alerts to tick a box?

The promise to monitor high-risk transactions is meaningless without clear criteria or accountability for when banks fail to act.

The 24/7 reporting channel is a basic expectation, and sharing scammer account information should have been standard practice years ago. The mule who laundered my money scammed another half a million after I notified his bank and the police, by simply opening an account in a different bank.

Zero accountability: Banking in the shadows

Perhaps the most glaring flaw in the NZBA’s new measures is the complete absence of transparency and accountability.

Under these reforms, banks face no obligation to publish any data on scam reimbursement claims: how many they receive, how many they approve, or crucially, how many they reject.

This creates a black box where banks can continue denying legitimate claims with impunity, safe in the knowledge that their practices will never face public scrutiny.

Banks have systematically denied reimbursements by broadly interpreting vague exclusion criteria, claiming victims “ignored warnings” or “acted negligently” while maintaining the public facade of being protective and supportive.

The lack of transparency extends beyond individual cases. The banking sector collectively avoids releasing statistics that would reveal the true scale of fraud and their response to it. This opacity serves only to shield banks from accountability while giving the impression of action.

A truly effective anti-scam regime would mandate regular public reporting on reimbursement rates, reasons for rejection, and bank-by-bank performance comparisons. Such transparency would create genuine incentives for banks to improve their fraud detection systems and treat victims fairly, rather than finding increasingly creative ways to deny claims.

The Banking Ombudsman, theoretically our watchdog, has proven toothless in addressing this systemic failure. With limited powers and a reluctance to challenge the industry that funds it, the Ombudsman offers little recourse for victims facing blanket denials.

In my own case, the Ombudsman accepted the bank’s argument that I should have somehow recognised sophisticated deception techniques that the bank’s own’systems failed to detect.

The bank reply that they disagree with the decision of the Ombudsman for a partial refund but congratulated them on making me responsible as well.

Until banks are forced to operate in an open and accountable manner, these new measures will remain what they appear to be: a public relations exercise designed to avoid being regulated while maintaining the profitable status quo.

The case for retroactive reimbursement

Perhaps the most egregious aspect of the NZBA’s plan is its forward-looking implementation with no provision for past victims. The November 2025 timeline not only gives banks an unnecessarily extended runway to implement basic protections, but also abandons countless Kiwis who have already lost their life savings to scams.

The banking sector’s refusal to make these reimbursement policies retroactive is both cruel and illogical.

It creates an arbitrary dividing line where victims who lost money before the implementation date are simply told “too bad, so sad”, while those scammed afterward are protected.

This artificial distinction ignores an undeniable truth: banks have consistently failed to invest in adequate security measures despite years of warnings and international examples showing what could be done.

For victims like me and thousands of others, the message is clear: our losses don’t matter. Our suffering is simply collateral damage in the banks’ slow, reluctant crawl toward minimal consumer protection.

We are expected to accept that our financial ruin was necessary to finally spur the banking sector into action, action they could have taken years ago had they prioritised customer safety over cost savings.

The likely argument against retroactive reimbursement - that it would be too costly - rings hollow when considering the billions in profits banks report annually, reaching record highs each year.

For context, the Australian-owned banks operating in New Zealand collectively posted over $6 billion in profit in 2023 alone.

The funds exist. What is missing is the will to do right by customers who have been failed by inadequate systems.

A proper retroactive repayment scheme is chump change for them.

True leadership would require banks to acknowledge their historic failure to protect customers and establish a compensation fund for past victims.

Other countries have implemented similar schemes when widespread industry failures have harmed consumers. New Zealand’s banks could easily afford to do the same, if they valued their customers as more than just sources of profit.

We are entrusting them with our economy, and we expect to be paid in kind.

As we look ahead to November 2025, the question remains: how many more Kiwis will join the ranks of the uncompensated before these half-measures finally take effect?

And will we continue to accept a banking system that protects its bottom line while abandoning those it has failed to protect?