On the phone, “William McAuley” was calm and helpful. Jo, who did not want her last name used, had already had fraudulent activity on her credit card that week – and now, McAuley told her, her bank account had been compromised.
He said he was from the Up bank’s fraud team and knew all her details – her date of birth, how much she had in her accounts. He sent her an “authentication text” that appeared in the same message thread with legitimate Up communications.
Towards the end of their 90-minute conversation, McAuley told her she needed to set up a new Up bank account and asked her to transfer $4,932.77.
After hanging up the phone, Jo suspected she had been the victim of a scam and found the money had been transferred to a Commonwealth Bank account. She said both banks told her they had locked down the funds and that she would get her money back.
Eventually Jo got $400 back – and has been fighting for the rest.
She said she understands customers need to try keep themselves safe, but said banks needed to take greater responsibility.
“It’s really only the banks and government that can combat this,” she said. “It needs to be a financial incentive on the banks to stop it happening.”
Last month, in a world first, the UK’s Payment Systems Regulator mandated that banks will have to reimburse victims of push payment fraud, where scammers impersonate financial institutions or the police, within five days – beginning next year.
Now there are calls for Australia to follow suit. But Australian banks have resisted the calls, claiming the reimbursement model has seen scam numbers increase at a four-fold rate compared with Australia.
“Since implementing the contingent reimbursement model, scam case numbers in the UK have grown at a rate four times faster than in Australia,” a spokesperson for the Australian Banking Association said. “British citizens are now greater targets for scammers as a result.”
On Thursday CBA’s chief executive officer Matt Comyn said leaving compensation up to financial institutions had not proven to be an effective strategy.
ANZ CEO Shayne Elliott was also cautious of the UK model and said it could potentially make people less careful about falling for scams.
“Making the banks pay for it does not solve the problem, it just moves the problem somewhere else,” he said.
But the acting chief executive of the Consumer Action Law Centre, Tania Clarke, said the reform had been effective – with the total amount of losses dropping.
“Last year bank customers in the UK experienced a 17% drop in scam losses while, in Australia, bank customers experienced a 62% increase,” Clarke said.
Between 2019 and 2022 reported scam losses via bank transfer in Australia increased by a staggering 200%, she said.
“These figures paint a disturbing picture of the outsized vulnerability of our citizens to scams and the bad news is that things are likely to get worse,” Clarke said.
Last financial year the major banks reimbursed just 2% to 5% of their customers’ losses, according to a report released in April by the Australian Securities and Investments Commission.
On Wednesday, before the House of Representatives economic committee, Elliott, was asked by Labor MP Jerome Laxale if he would sign a voluntary code to reimburse victims.
“No,” Elliott said, adding that a voluntary code “doesn’t stop the scams”.
“We’ve got to do a better job on education. We are investing in more technology to stop scams and to detect them.”
The ABA spokesperson said the body supported the approach of the federal government in setting up the National Anti-Scam Centre.
“The banking sector has a range of anti-scam initiatives under way designed to disrupt scams, including the recently launched Fraud Reporting Exchange to help recover money for customers more efficiently.
“The ABA also recently ran a campaign to raise awareness of a series of scam scenarios and provide customers with tools to beat the scammers.”
The assistant treasurer and financial services minister, Stephen Jones, said: “The UK scams model sets a very high bar for providers to reimburse victims of certain types of scams, with clear obligations on providers and consumers.
“The Albanese government intends to introduce tough new industry codes of practice to protect consumers against scams.
“I have an expectation that the model will require banks to provide appropriate compensation to victims, where these institutions do not meet the very high bar set out in the codes.
“Policy details of Australia’s scam codes are being worked through; however, it is my intention that public consultation will start soon.”
Neither of the banks involved in Jo’s case would comment directly on it for privacy reasons.
“Banks must balance objectives of protecting our customers and following their correctly authorised payment instructions,” a spokesperson for Up said.
“We take our customers’ security very seriously and use a combination of several key industry practices to safeguard our customers.’”
In March McAuley called Jo again and tried the same trick. This time she hung up the phone.
“He’s just out there doing it and the bank knows that he’s pretending he’s from their fraud team,” she said.
“The police can’t seemingly do anything … It’s not treated as a criminal matter.”
