Number of scam cases accelerating fast, says Banking Ombudsman
19 September 2023
Complaints about scams are increasing at a worrying rate, says the Banking Ombudsman.
The Banking Ombudsman Scheme’s annual report shows customer complaints about scams rose 43 per cent on the previous year, making up 625 of the 3,513 complaints received in 2022-23. Nearly a third of all complaints formally investigated were about scams, and the average loss was $57,000. Phishing and investment scams predominated.
Banking Ombudsman Nicola Sladden said the continual emergence of new and more sophisticated scams was a key factor in the rise, compounding a problem that was already costing New Zealanders more than $200 million a year.
“To slow this trend, the banking sector, along with other organisations, must take a more co-ordinated and unified approach to the problem.
“The Singaporeans have shown how beneficial such an approach can be. Their recently established anti-scam centre, made up of representatives from 80 stakeholders, has disrupted scams with great success through skilful intelligence-gathering and the clever use of technology.
“Working together to educate consumers about scams and how to avoid them can also pay dividends – as we showed this year with the well-received documentary series You’ve been scammed by Nigel Latta.
“One immediate way to beat some scams would be to introduce confirmation of payee technology. Banks are investing in better systems and security all the time, but this would be a game-changer – as consumers in the United Kingdom know and as consumers in Australia are beginning to discover.
“Authorised push payment fraud – and also accidentally misdirected payments – could be reduced by this technology, which allows a customer to check whether the name of the recipient's account matches the name and account details provided by the customer.“
There is currently no contractual or legislative requirement for a bank to check whether the name of the recipient’s account matches the name and account details provided by the customer. Banks have committed to work with PaymentsNZ to help make a confirmation of payee service a reality. We support the urgent implementation of this fraud detection system.
Ms Sladden said there had been an increase in sophisticated unauthorised payment scam cases in which customers were duped into entering their banking credentials into fake websites.
“Banks must reimburse unauthorised online transactions unless customers have been dishonest or negligent, breached the terms and conditions of their accounts or cards, or failed to take reasonable steps to protect their banking.
“In one of the cases highlighted in our annual report, the customer genuinely believed she was giving payment authorisation codes to the bank, and there was nothing suspicious about the website that would have alerted a reasonable customer to the fact it was a fake.
“We did not consider she had acted negligently or breached the terms and conditions of her account by entering her details and the codes from her bank into the fake website.
“We also pointed out in this case that the bank’s text and email warnings about the codes were not sufficiently explicit. The bank reimbursed the customer for the full amount lost, nearly $30,000.”
More than 5,500 bank customers contacted the scheme during the year, an increase of almost 20 per cent on 2021-22. The overwhelming majority of complaints – 95 per cent – were responded to within one working day.
A scheme-run dashboard that compiles data about complaints to banks showed more than 102,000 customers made complaints to their bank during the year, a rise of 10 per cent.
See the annual report here.
Nigel Latta turns spotlight on scammers and psychology of scams
28 June 2023
New Zealanders are losing millions of dollars a year in scams, but a documentary series airing next month fronted by clinical psychologist Nigel Latta aims to reverse this trend by making scammers’ methods – and how to counter them – known to the widest possible audience.
The four-part series You’ve been scammed by Nigel Latta begins 8pm, Monday 3 July on TVNZ, and is supported by the Banking Ombudsman Scheme, in collaboration with New Zealand banks. It brings together some of the country’s foremost experts on scams.
Banking Ombudsman Nicola Sladden said the series had been developed to highlight the psychology behind scams, to share tips for keeping customers’ money safe, and to remove the embarrassment felt by some when scammed.
“The problem is getting worse year by year, as our scheme knows only too well from the increasing number of scam cases coming to us.
“Estimates of losses are hard to say for certain because many victims are too embarrassed to report scams, but the reported figure of nearly $200 million a year is undoubtedly a conservative one.
“New Zealanders like to think they’re a savvy bunch – in fact, 90 per cent believe they can spot a scam – but the losses tell a different story. People of all ages fall victim to scams, losing anywhere from a few hundred dollars to tens of thousands of dollars. Scam activity is constantly evolving and becoming more sophisticated.
“The more people can understand the way scammers try to exploit their emotions, the greater the chance of preventing scams. By highlighting how scammers take victims’ money, this series will hopefully increase consumer awareness and empower people to detect and report scams.”
In each episode, Nigel examines a different type of scam and interviews real-life victims to hear how they were duped into parting with their money. He reveals the emotional vulnerabilities scammers can exploit to draw people in, as well as the technological means by which they take their money. He also suggests tips to minimise the risk of being scammed.
Episode one looks at impersonation and phishing scams, also known as information-harvesting scams. Episode two examines investment and buying and selling scams; episode three uncovers extortion and invoice scams; and the final episode deals with remote access and romance scams.
Episode one contains a real-life call from a scammer impersonating an employee in a bank’s fraud team. Nigel and Netsafe Chief Online Safety Officer, Sean Lyons, dissect each stage of the call and show how easily a scammer can use some basic details about a person to build rapport and “socially engineer” him or her into sharing sensitive information. From there, it is only a short step to setting up banking access on another device and draining the victim’s accounts.
Ms Sladden said people should be wary of any message that asks them to click on a link or provide personal or banking details.
“Do not take any action, click on a link, open an attachment, and/or follow instructions before you know the message is genuine. To establish whether a message is genuine, check directly with the organisation you believe it came from.”
If you think you’ve been scammed:
- call your bank immediately on their listed number.
- report it to 0800 CERTNZ and 0508 NETSAFE.
- contact the Police.
You’ve been scammed by Nigel Latta first airs on Monday 3 July at 8pm on TV1 and TVNZ+.
Nigel Latta is available for media interviews. To arrange an interview, call Leah Smith, Senior Publicist, TVNZ on 021 935 442. For further comment from Nicola Sladden, call 021 808 059.
The series was produced by Ruckus Media, led by the Banking Ombudsman Scheme, and supported by ANZ, ASB, Westpac, BNZ, Rabobank, Heartland, NBS, The Co-Operative Bank, TSB, SBS, HSBC, ICBC, Bank of China and Kiwibank.
The Banking Ombudsman Scheme is a free and independent dispute resolution service for people who have banking problems. You can contact us on www.bankomb.org.nz or on 0800 805 950.
Bank liable for customer loss of $60,000 in phishing scam
12 June 2023
The Banking Ombudsman Scheme is seeing increasing sophistication in online phishing scams.
A bank customer who lost $60,000 after receiving an email from what he thought was the Inland Revenue Department has highlighted the increasing sophistication of phishing scams says Banking Ombudsman Nicola Sladden.
The customer entered his banking details and an SMS code to a fake website because he was convinced he was dealing with the tax department and his bank.
“Ordinarily, banks are liable for a customer’s losses as a result of an unauthorised transaction – typically a scam – if the customer has taken reasonable care to protect his or her banking. In this case, such was the sophistication of the scam that we considered the customer had shown reasonable care in the circumstances."
“We therefore found the bank should reimburse the customer the full $60,000.”
“Regrettably, it is but one of a growing number of phishing cases, like the recent road toll text scam, involving customers who are duped into disclosing their banking details and thereby enable scammers to steal their money.”
“We urge bank customers to be wary of any email or approach that asks them to carry out an online action via phone call or text. A definite no-no is to click on a link or call a number from a text. Customers should always independently contact the organisation concerned to verify any activity they have not themselves initiated.”
In the case of the Inland Revenue Department scam, the customer received an email purportedly from the tax department asking him to log into his myIR page and to verify his bank account details in order to receive a tax refund. The page contained a link to what looked – very convincingly – like his bank’s website where he logged in to his internet banking and entered an SMS code.
The entire interaction, with the exception of the bank’s SMS code, was an elaborate front. The SMS code had been generated by the bank when the scammer had attempted to set up mobile banking on his device. The customer thought the SMS was related to his internet banking log-in and it therefore failed to raise suspicion. The scammer then used the code to complete the mobile banking setup, and over subsequent days made withdrawals totalling $60,000.
Ms Sladden said the bank had rejected the customer’s request to reimburse the loss, saying he had breached the terms and conditions of his account by giving the scammer information to access his internet banking, in particular his log-in details and the SMS code. However, the scheme found the customer had acted reasonably in the circumstances. The scheme said the customer might have been alerted to the scam if the SMS message had made clear the purpose of the code – to set up mobile banking on a new device, not, as he thought, to log in on his internet banking.
Ms Sladden said a growing proportion of complaints to the scheme involved scams, yet it knew this was only the tip of the iceberg. Bank data suggests nearly $200 million a year of scam losses.
Banks are obliged to reimburse a customer’s fraud losses, where someone has accessed their banking without authority, so long as the customer wasn’t dishonest or negligent, complied with the terms and conditions of the account, and took reasonable steps to protect his or her banking.
Ms Sladden said scam victims should contact their bank directly for help in trying to recover their money. The scheme could offer independent advice and help to victims experiencing problems dealing with their bank in such cases.
For more information on the case, see the scheme’s case note or contact Nicola Sladden at [email protected].