With the big four banks tipped to make record profits this financial year, consumer rights advocates are calling for financial institutions to invest more in protecting customers against scams.
Australians have lost more than $96m to scams so far this year, with the Australian Competition and Consumer Commission estimating that is just the tip of the iceberg as most go unreported.
UBS analysis suggested the big four banks will collectively rake in more than $33bn this financial year, up from $28.5bn last year, largely due to fatter margins after interest rate hikes.
The Commonwealth Bank last year reported its biggest half-year profit at $5.15bn, an increase of 9% from the previous year.
NAB, Westpac and CBA have defended their scam responses, arguing they are already investing millions of dollars into prevention.
But the chief executive of the Consumer Action Law Centre, Stephanie Tonkin, said with how much scams are increasing, not enough is being done.
“Despite their increasing profit margins, the major banks continue to underplay a crisis that is affecting thousands of their customers and causing untold financial and emotional distress in the community,” Tonkin said.
“Banks argue that it is the individual’s responsibility to recognise and prevent scams, even though scams are becoming increasingly complex, elaborate and sophisticated – often impersonating or replicating the banks’ own platforms.
“Customers who lose money this way are rarely reimbursed by their bank and if they are, the amount is often a small proportion of that loss.”
Tonkin called on ANZ and NAB to follow Westpac and CBA in introducing technology checking the payee name and details match up. She said Australia should follow the UK’s lead, where some financial institutions have signed up to a voluntary code meaning banks should refund the money unless a customer acted fraudulently or with “gross negligence”.
“Mandatory reimbursement of scam losses, except in cases where customers have been grossly negligent, would incentivise banks to tackle this crisis head-on,” Tonkin said.
Australia’s big four banks have previously pushed back on mandatory reimbursements, arguing they could “inadvertently lead to increases in scam activity” and that customers should keep themselves safe.
Westpac and NAB have placed their phone numbers on “do not originate” lists which helps reduce scam calls impersonating their numbers.
The general manager of NAB executive group investigations and fraud, Chris Sheehan, said the bank had invested $700m in scam prevention.
“My team takes about 85,000 calls from customers on scams each month and in the last 12 months, we have added around 140 people to help us respond,” Sheehan said. “We’re also using new technologies like Biocatch in our digital channels to help us monitor for fraudulent activity.”
CBA and Telstra announced on Tuesday they are testing a “scam indicator” to detect when customers contacting the bank may be being scammed. CBA said earlier this month its name-checking technology would launch in March and give customers an indication of whether the name and account details they entered look correct.
The CBA’s chief executive, Matt Comyn, said the bank was committed to stopping scams.
“We acknowledge that there is more to do given the rising volume and fast changing nature of scams,” he said. “We’re committed to playing our part to address this national priority alongside leading businesses, government, and the broader community.”
ANZ did not respond to requests for comment.
