The Banking Ombudsman annual report confirms that about a third of the annual investigations it conducts are now bank-related, with victims suffering an average loss of $57,000 and costing an overall of over $200 million a year. Ombudsman Nicola Sladden said that the sharp increase in banking scams was worrying and wants the banking sector to undertake a more coordinated and unified approach to the issue.
The majority of the incidents were found to be phishing or investment scam-related. Sladden is recommending the introduction of confirmation of payee technology to help combat the scams. Terming this approach as a game changer, she noted that it was already in use in the UK and Australia.
Sladden also cautioned people to keep their banking passwords and other information confidential and be wary of clicking on any online links. She said that there had been increased cases of people entering their banking credentials into fake websites thanks to more sophisticated unauthorised payment scams.
One of the cases highlighted in the report was one of a banking customer who input her payment authorisation codes on a fake website without noticing anything suspicious. The report found that she had not acted negligently nor in contravention of the terms and conditions of her account. The report recommended that banks should reimburse unauthorised online transactions unless it is found that the customer acted dishonestly or negligently.
The New Zealand Banking Association (NZBA) has also revealed new proactive measures that will be introduced to help curb financial scams that specifically target bank customers. Amongst the measures are the establishment of a centralised, multi-sector, and coordinated national Anti-Scam Centre, combating “mule” accounts, and the introduction of an account name-checking service. NZBA chief executive, Roger Beaumont, hopes that the joint commitment between retail banks will have a positive impact on tackling these scams and frauds.
Consumer NZ head, Jon Duffy, has said that there was an urgent need to better protect banking customers from scammers. He lamented how behind New Zealand banks appeared to be those in other comparable countries when it came to scam protections. He is urging banks to reimburse customers who fall victim to scams where confirmation of payee functionality is in place and would have prevented the incident.
Although he also supported the formation of an Anti-Scam Centre, he expressed concern over its being industry-led. He said that this approach would likely mean a lack of independence, consumer trust, and difficulty in administration.
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