The consumer watchdog has today launched an attack on Kiwi banks for “glacial” progress in tackling international scammers three months after the sector outlined a suite of proposed measures to curb fraud and protect customers. 

The sector has today released a statement saying banks are cracking down on “mule” accounts and beginning work on a system to match account names and numbers in the bid to stop cyber criminals fleecing unsuspecting New Zealanders. 

But today’s announcement contains little in the way of hard deadlines to protect people, sparking a swift response from Consumer NZ CEO Jon Duffy. 

“We are concerned by the glacial progress outlined in the NZBA’s release. New Zealanders are losing hundreds of millions of dollars a year through scamming and fraud – banks need to be acting with urgency to protect their customers.” 

Scammer are estimated to have stolen $200 million from Kiwi victims in the last 12 months. Many are part of international crime syndicates based offshore. 

A Herald investigation has highlighted the plight of numerous victims who were duped this year through elaborate investment scams. They believed they were investing in legitimate term deposits or share portfolio offerings but ended up losing their life savings. 

Under growing pressure to improve security, the New Zealand Banking Association announced a raft of measures three months ago to counter the growth in scams and protect customers. 

The Herald sought an update on the work last week, including what had been completed and when the new measures would finally be introduced. 

NZ Banking Association provides update on anti-scam measures 

Association chief executive Roger Beaumont provided an update today. 

He said work towards establishing a national Anti-Scam Centre to coordinate a multi-sector fight against fraud and scams - like that in Singapore - was “progressing”. 

“The first phase of work is now live and is focused on sharing additional information to help identify and reduce fraudulent payments to mule accounts. Banks were already sharing some information on money mules, but the new phase of work will increase the speed and amount of information being shared.” 

A money mule is a person, or company, used by criminals to transfer illegally obtained money on their behalf. The mules often receive money into a NZ account before transferring it offshore to the criminal masterminds, taking a cut for their role in the fraud. 

Beaumont said a range of financial, legal, privacy and technology experts were working together to tackle this issue, which he acknowledged was a growing problem. 

“We are committed to further progressing this work with support from other agencies by mid next year.” 

Carla O'Neil lost $100,000 in an elaborate investment scam in which she thought she was putting the money into a Citibank term deposit. Photo / Michael Craig 

Confirmation of payee system to fight fraud 

Another initiative announced thee months ago was introducing a “confirmation of payee” account name checking service. This system is in place in many overseas jurisdictions and has been credited with reducing the amount of scam losses. 

The Banking Ombudsman and Consumer NZ have called for its introduction here to protect customers. But despite a trial in New Zealand banks several years ago, it is yet to be introduced. 

“We are currently looking at technical options and extensive work is underway to ensure compliance with existing privacy laws,” Beaumont said. 

“This will enable a timeline for the initiatives, including implementation of a confirmation of payee service, which will allow people making an online payment from one bank account to another to check the name of the account they are paying. We expect to provide more detail by the end of April.” 

A third initiative was removing weblinks from texts to customers, which Beaumont said was “progressing strongly”. 

“Scammers often use weblinks or hyperlinks in text messages to gain access to people’s bank accounts. To help reduce this kind of scam risk, banks have committed to removing links from texts to customers. Some banks are already there, and nearly all will have done this by the end of April, with others following as soon as they can.” 

Roger Beaumont, chief executive of the New Zealand Bankers Association. Photo / Dean Purcell 

Finally, Beaumont said banks were raising public awareness about scams and how to avoid them. 

The sector was re-running its “Take a Sec to Check” radio campaign over the summer holidays to encourage customers to pause before making a payment or giving away personal information to ensure it wasn’t a scam. 

However, today’s announcement provided no update on the banking sector’s stated work to provide “more consistent and timely outcomes for customers who suffer financial losses”. 

In Britain, banks are now forced to refund customers who are tricked into sending money to scammers in “authorised” transactions, including the likes of investment or romance scams. 

In New Zealand banks generally only refund customers if the money has been removed from their account without their knowledge or authority. 

Critics say forcing banks to refund authorised transactions would encourage them to invest more heavily on scam security and identification systems, offering further protection to customers and reducing fraud. 

Consumer NZ boss Jon Duffy criticises banking sector’s ‘glacial’ progress 

Duffy hit out at the banking sector following today’s announcement. 

“We are concerned by the glacial progress outlined in the NZBA’s release. New Zealanders are losing hundreds of millions of dollars a year through scamming and fraud – banks need to be acting with urgency to protect their customers. 

“Based on losses reported by the Banking Ombudsman last year, we estimate New Zealanders will have lost a further $100 million between September when the NZBA first announced its intention to take steps to help prevent scams and fraud and April next year.” 

While developing anti-fraud measures was complicated, scams and fraud were not new, Duffy said. 

Banks (and other industries) should have acted sooner to implement the measures the NZBA outlined in September. 

Consumer NZ called on banks to fast-track a confirmation of payee system back in September because it believes this will have an immediate impact on scams. 

“International experiences indicate this is a system that works. We think banks’ failure to implement COP means they have not been adequately protecting their customers. Until this technology is introduced, we think banks should reimburse anyone who loses money if that loss could have been prevented by COP.” 

A man who lost $400,000 earlier this year through an elaborate investment scam also took aim at today’s announcement by the banking sector. 

“It’s such a shame it’s been necessary for things to get as bad as they are before banks finally get serious about making changes to their payment systems. These are simple measures which should have been introduced when the UK made steps in 2019. 

Help keep yourself safe from scams – take a sec to check before parting with your money or personal information 

- Trust your instincts – if it feels wrong, it probably is. Urgency is a red flag – scammers try to rush you. 

- Your bank will never ask you for passwords, log-in details, or two factor authentication codes, nor will they send you an email or text message asking you to log in. 

- Your bank will never tell you to move your money to a ‘safe’ account, or ask you to use your money to help catch a scammer. 

- Think carefully before entering your credit card details online. 

- Be cautious with unsolicited texts, emails, or calls – don’t give out details that could be used to impersonate you. 

- Don’t click on links or open attachments from people you don’t know, or seem out of character for someone you do know. Hover over links to reveal the actual site. 

- Don’t respond to instructions to download unknown software – it could be malware to access your accounts. 

- Be careful of deals or investments that sound too good to be true – they probably are. Contact investment firms or businesses via their official New Zealand based websites, and never via online contacts, emails, links, or phone numbers sent to you directly or from other websites on the internet. 

- Use strong, unique passwords and PINs for your banking – don’t write them down or record them. 

If you think you’ve been scammed report it to your bank immediately. 

* Source: NZ Banking Association