Banking ombudsman Nicola Sladden, in her annual report, released this week, said new and more sophisticated scams were a key factor behind a 43% rise in customer complaints in the year ended June.
Almost a third of complaints are about scams.
The average loss was $57,000, costing New Zealanders more than $200million a year.
Many other scams have led to smaller monetary losses or stolen personal details. Many will never be reported.
A Horizon Research survey of 1039 New Zealanders, released this month, found 13% (which would extrapolate to 512,000 adults) have had someone use a bank card, credit card or document to commit fraud or steal from them.
Ten percent had experienced fraud and theft involving a bank account, and 7% had been a victim of cybercrime, with an internet device accessed without permission.
The range of scams and frauds includes phishing (emails pretending to be from trustworthy organisations), social media scams (asking for money while pretending to be someone you know), invoice scams, tech-scam calls (to request access to your devices), money and investment scams, romance scams and text scams.
When only a small proportion of losses are reported, it is estimated New Zealanders could be ripped off by several hundreds of millions of dollars.
It would be a rare person who has not, at least, received fake texts purporting to be from the likes of Inland Revenue, New Zealand Post or Waka Kotahi New Zealand Transport Agency.
Banks have been under pressure to do more than just warn people about scams, including possible class actions. The New Zealand Banking Association responded last Friday with various measures and planned improvements.
As with the level of bank card and interchange fees and progress towards open banking, the response has been too slow. The banks have needed pushing. More pressure will be required.
Banks, naturally, want to make as much money as possible. They will want to sheet responsibility home to customers where they can claim negligence. They will emphasise the complications of making change.
The important measures announced lack specific timeframes, notably on "confirmation of payee" account name checking. This has been in place in Britain since 2020 and has made an immediate impact on bank transfer scams.
It would have made a big difference for the likes of the Citibank investment scam. Tricked investors sent millions to a "mule" ANZ account, from which the money was whisked overseas.
It would have been obvious to "investors" that their money was not going to Citibank when details of the bank account came up before they confirmed their transactions.
This improvement would be most useful for everyday internet banking and the paying of the likes of a plumber’s bill.
People would not have to be as anxious about possible mistakes with bank account numbers.
Ms Sladden has called this change urgent, as has Consumer New Zealand.
Parliament’s finance and expenditure committee in August also backed the confirmation-of-payee change. Banks, as well, were encouraged to reimburse victims tricked into payments to scammers.
The banks say they will support the establishment of a multisector anti-scam centre. Australia’s 2023 Budget included $A86.5m ($NZ94m) to establish a national anti-scam centre and $A46.5m towards a co-ordinator for multi-agency cyber-security efforts.
Banks say they should work together to combat "mule" accounts — better late than never. Likewise, there should be "more consistent and timely outcomes for customers suffering losses".
The weblinks from texts to customers should be long gone. Most banks have now stopped this practice.
Banks and other organisations — because scams involve telcos and other institutions — should share "real-time" information.
Clearly, prompt action is needed on several fronts to combat the toll caused by banking scams.
