ACCC calls for ‘confirmation of payee’ protection

John Kavanagh

Better processes are needed to alert customers to irregularities in payments, such as where account numbers do not match names, the Australian Competition and Consumer Commission says in its latest report on scam activity.

Payment redirection scams and other business email compromises were among the costliest consumer and business scams reported last year, accounting for A$128 million of losses suffered by Australians.

The ACCC report details total losses of $850 million in 2020, based on reports to Scamwatch, government agencies and banks. This is a 23 per cent increase over the previous year.

Other top scams included people impersonating government agencies, scams related to vehicle sales, fake bushfire charities, romance baiting and celebrity endorsement scams, where the image of a well-known person is used to sell a product.

In a payment redirection scam, scammers compromise a business email, then impersonate the business via email and request that an upcoming payment be redirected to a fraudulent account.

Scammers may request that bone fide payments be redirected or create fake invoices to be paid to the fraudulent account.

The ACCC said: “As banks move towards more real time payments, there is a greater need for real time solutions that can identify and halt scam transactions via bank transfers. In addition, the ACCC notes that better processes could be developed to alert customers when an account number does not match a name.”

It pointed to the UK Confirmation of Payee scheme as an example. When a consumer or business sets up a new payee or amends an existing payee’s details, they receive a message from their financial institution confirming that the details entered match the account of the person or organisation they are paying.

They will be told if the details are a “close match’ or not a match at all and advised to check before proceeding.

Banks reported that they “saved” $208 million, either by detecting a scam before payment was made or recovering the money from a financial institution before the money was moved elsewhere.

Bitcoin featured prominently as a payment method preferred by scammers. While bank accounts accounted for 8215 payments to scammers and credit cards accounted for 6267, Bitcoin was used in 1985 payments to scammers and accounted for $26.6 million of losses.

One surprising aspect of the report is that almost half of all scams, which people tend to associate with the internet, were initiated by telephone calls. Twenty-two per cent were initiated by email and 15 per cent by text message.