The Australian Competition and Consumer Commission has renewed its call for banks to introduce confirmation of payee arrangements as a way of improving consumer protection against the growing risk of scams.
In its latest report on scam activity, Targeting Scams, the ACCC said most payments to scammers were via traditional bank transfers.
“The ACCC appreciates that the finance sector is increasing its efforts to combat scams but it is of the view that more is required to increase the effectiveness of scam prevention,” the report said.
The ACCC said the introduction of confirmation of payee in the UK in 2019 was “a game changer”. When a consumer or business sets up a new payee or amends an existing payee’s details, they receive a message from their bank confirming that the details entered match the account of the person or organisation they are paying.
They are told if the details are a ‘close match’ or not a match at all and advised to check before proceeding.
“Better processes could be developed in Australia to alert customers when an account number does not match a name. This would be useful in disrupting payment redirection scams and would also provide limited protections for consumers from other types of fraud and mistaken payment,” the report said.
The ACCC first proposed introducing confirmation of payee last year and since then consumer groups have started promoting the idea. The Consumer Action Law Centre said in a statement yesterday that the government should introduce rules for banks to better detect and prevent scams, similar to those in the UK.
Data collected from Scamwatch, ReportCyber, government agencies and 12 financial institutions shows there were 567,000 reported losses from scams worth A$1.8 billion in 2021. Reports to Scamwatch alone rose 84 per cent to $324 million.
The biggest losses were to investment scams, followed by payment redirection scams and romance scams.
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.”
Banks that provided data for the report told the ACCC that they prevented or recovered more than $340 million from being sent to scammers and refunded more than $100 million to customers who were victims of scams.
Commonwealth Bank announced yesterday that it has introduced new artificial intelligence technology to help detect suspicious behaviour on its banking platforms. The AI is used to track unusual changes to the way a customer interacts with their devices.