Australian Banks Tighten The Noose To Protect Customers From Scams
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Australian banks have committed to more efforts to address scams using technology. These institutions will set systems to ensure customers do not transfer money to fraudulent accounts.
These banks had initially resisted plans by the Australian Competition and Consumer Commission (ACCC) and the Consumer Action Law Centre (Calc) to halt transfers in cases where the name and bank details failed to match.
Protecting Customers From Scams
Consumer advocates said the bank announcement was a major step towards blocking millions of annual scams. These groups also urge the Australian government to follow similar initiatives established in the UK mandating banks reimburse victims of scams.
Australians have lost over $400M to scams, with the ACCC saying that the amount is likely larger. Most victims fail to report any losses incurred from scam activities.
Australian banks are now working together for a new scam-safe accord. This initiative will involve a $100M investment towards a new “confirmation of payee” system across the banking industry.
The confirmation of the payee will ensure that scams drop significantly. It will also guarantee that people can confirm money transfers to the intended person. Customers are also urged to anticipate warnings and delays when paying new persons and increasing payment limits.
Banks To Improve Scam Protection Measures
The recent initiative is an improvement from PayID, the protective measure currently in place. PayID allows consumers to check that a payment is not misdirected.
Banks will also be required to improve the technology and controls in place. It will have unique identification measures whenever users open new accounts.
The banking sector dominates the financial industry, with $2.5 trillion of transactions annually. Given this large size, having a payee confirmation system that works across the entire industry will be a major challenge.
While commenting on these reforms, Stephanie Tonkin opined they would make a major difference. Tonkin has also urged the government to have mandatory codes that raise the bar on liability for scam losses.
She also noted that some scams would go undetected when scammers innovate. As such, banks needed to reimburse customers, which would improve upon the existing regulation.
