Need to know
- Four out of five of the victims we heard from said their banks did nothing to flag a scam before they transferred their money to the perpetrator
- About half of these scam victims say any support they received from their banks was sorely lacking
- In over half the cases we documented, the scammer first made contact with their victim on a website or social media platform
To gauge the enormity of the problem of scams in Australia, it helps to look at the numbers.
Australians lost $2.7 billion to scams last year, most of it stolen from older people. The 2022 numbers were worse – $3.1 billion spirited out of our bank accounts and into the pockets of scammers.
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.
Failing that, these businesses should at least do their best to support customers who become victims of them. But a CHOICE survey of 280 scam victims tells a different story.
The resulting report, Passing the Buck: how businesses leave scam victims feeling alone and ashamed, delivers disturbing news.
Four out of five of the victims we heard from said their banks did nothing to flag a scam before they transferred their money to the perpetrator
Four out of five of the victims we heard from said their banks did nothing to flag a scam before they transferred their money to the perpetrator. And about half of these scam victims say any support they received from their banks was sorely lacking.
Banks are 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.
Victims of scams carry the burden
Shame and embarrassment play key roles in whether a scam victim even tries 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 is also a factor. Over half of survey respondents said they were under stress around the time the scam occurred.
Our data shows that it's a real roll of the dice as to how a scam victim is treated by their bank
CHOICE director of campaigns Rosie Thomas
"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," says CHOICE director of campaigns Rosie Thomas.
"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."
Australians 65 and older lose more money to scams than any other age group.
Where banks have to pay you back
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.
There are a few exceptions to reimbursement, including whether the customer was grossly negligent, but their vulnerability to the scam is taken into account.
Australia is a long way behind when it comes to banks helping scam victims.
Only 14% of our 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.
Australia falling behind on anti-scam regulation
In November last year, the Australian Banking Association announced the industry would introduce a confirmation of payee system, an account name-matching protocol designed to prevent bank customers from transferring money to scammers.
The long-awaited measure is expected to be rolled out over 2024 and 2025.
Such a system was adopted by the six largest banks in the UK in 2019, covering 92% of bank transactions. After the first year, transactions to the wrong account, including scammers' accounts, fell by 35%.
In the UK, an Online Safety Bill came into effect last year that imposes penalties on platforms that fail to block fake ads and scams
When Dutch banks introduced the IBAN-name check service in 2017, reported scams and fraud ended up falling by 81%.
Our research suggests that around half the scams we documented could have been prevented by a 24-hour delay in transferring the money, according to victims.
Australia has also fallen behind on forcing digital platforms to prevent scammers from buying ads.
In September last year, a CHOICE investigation revealed that scam ads for some of Australia's most popular retailers were rampant on Google, Facebook and Instagram.
In the UK, an Online Safety Bill came into effect last year that imposes penalties on platforms that fail to block fake ads and scams, but to date there has been no parallel effort by the Australian government.
$345 million lost from January to March this year
Scams do not appear to be going away anytime soon.
The most recent quarterly update from the ACCC's National Anti-Scam Centre shows financial losses are trending downward, but there's still plenty of money being lost.
From January to March 2024, Australians lost $345 million to scammers as reported to Scamwatch, ReportCyber and the Australian Financial Crimes Exchange. (The billions in annual losses cited at the beginning of this article also include reports to IDCARE and ASIC.)
I thought that I would never get scammed, but now I don't answer phone calls, I delete emails, and I transfer money as little as possible and use cash as much as possible
Our scam victims research also shows that Australians are losing trust in online financial transactions, and that being scammed takes a heavy toll on victims' mental health and sense of wellbeing.
For many, it's a life-changing event. Three out of five of the victims we heard from said they're no longer confident when transacting on the internet.
"I thought that I would never get scammed, but now I don't answer phone calls, I delete emails, and I transfer money as little as possible and use cash as much as possible. There is a new scam every day," one victim told us.
"I reported the scam within four hours and gave a lot of detail to the fraud squad at the bank. To get only $50 back is shocking. The money I lost was everything I had at the time," another victim reported.
Anyone can fall victim
Our research bears out what has become increasingly obvious: anyone can fall victim to a scam.
"I did a huge amount of research but still got scammed," another victim told us. "The false websites, verbal communications, verbal and written documentations. This was a very well constructed scam. I could have lost much more."
In January, we reported on the case of a family losing $2.5 million after sending money to accounts controlled by scammers at Westpac, ANZ, Commonwealth Bank and Bendigo Bank. It all started with a fake ad on Google for investment opportunities. None of that money has been recovered.
The false websites, verbal communications, verbal and written documentations. This was a very well-constructed scam
Scam victim and CHOICE survey respondent
"Businesses like banks, telcos and social media platforms, who have the technology and resources to detect, prevent and respond to scams, are not moving fast enough to protect and support consumers from the scourge of scams," says Thomas.
"We've welcomed the Government's commitment to strong, mandatory obligations that provide a baseline of support – that way consumers can expect basic protections no matter who they bank with or what platform they're on."
We're on your side
In more than 60 years of making a difference for Australian consumers, we've never taken ads or sponsorship.
Instead we're funded by members who value expert reviews and independent product testing.
With no self-interest behind our advice, you don't just buy smarter, you get the answers that you need.
You know without hesitation what's safe for you and your family.
And you'll never be alone when something goes wrong or a business treats you unfairly.
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Stock images: Getty, unless otherwise stated.
