Banks falling short in scam response

Woman on phone and woman shocked looking at credit card. | Newsreel
A new report has called on banks to do more for scam victims. | Photo: Rain Star

A third of scam victims never report the loss to their bank out of embarrassment or the belief nothing will be done.

A recent CHOICE report also found about half of victims who did report to banks felt support was lacking and 80 percent said their bank did nothing to flag a scam before they transferred money.

CHOICE director of campaigns Rosie Thomas said the report, Passing the Buck: how businesses leave scam victims feeling alone and ashamed, is based on a survey of almost 300 scam victims.

“Our research highlights that scam victims are left feeling alone, ashamed and carrying the burden of scams, while the businesses enabling the criminal activities of scammers face virtually no consequences,” Ms Thomas said.

“After a scam is identified, the banks play an important role in helping to recover money and providing appropriate support. However, our data shows that it’s a real roll of the dice as to how a scam victim is treated by their bank, and whether they get the support they need.”

She said Australians lost $2.7 billion to scams last year, most of it stolen from older people.

“These are colossal figures by any measure, so it stands to reason that deeply resourced businesses like banks, telcos and tech platforms should know how to prevent scammers from infiltrating their services to pull off these fraudulent transactions.“

Ms Thomas said while four out of five of victims surveyed said their banks did nothing to flag a scam before they transferred their money and about half of these scam victims said bank support was lacking, banks were only part of the problem.

“In over half the cases we documented, the scammer first made contact with their victim on a website or social media platform, where it remains all too easy for criminals to set their traps.

“In about two out of 10 cases, the scammer initiated contact by text or phone call.”

She said shame and embarrassment played key roles in whether a scam victim tried to get their money back.

“About a third of the people we heard from just accepted the loss because they felt foolish that it had happened. Around the same number didn’t think reporting the incident to their bank would do any good.”

The victim’s state of mind was also a factor, with over half of survey respondents saying they were under stress around the time the scam occurred.

The report also found Australians 65 and older lose more money to scams than any other age group.

Ms Thomas said Australia was a long way behind when it comes to banks helping scam victims.

“Banks in other jurisdictions have certain obligations. In the UK, a mandatory reimbursement scheme for customers who unknowingly authorise a payment to a scammer through a bank, called an ‘authorised push payment’, is set to take effect in October this year,” she said.

“There are a few exceptions to reimbursement, including whether the customer was grossly negligent, but their vulnerability to the scam is taken into account.”

She said only 14 percent of survey respondents said their bank had alerted them that a probable scam was in the offing and more than seven out of 10 weren’t immediately notified by their bank that a scam had occurred.

“In half the cases we documented, victims say their bank made no effort to recover the stolen funds after they contacted them.”

Read more on the CHOICE website.