“There should be a standard, and if they don’t meet it they should be reimbursing customers,” Brody says.
Banks have predictably opposed such calls. A spokesman for the Australian Banking Association says banks often do cover losses, with $103 million in losses from scams covered by the banks in the last financial year. But he says banks may not cover a loss where a customer has been warned about a risky transaction, and they push on with it.
Banks claim they shouldn’t be responsible for all customer losses – instead arguing for a sustained effort to fight scams from government bodies, telcos, online shopping platforms, and the public. Banks say they are working on developing a consistent industry position, and are encouraging people to use PayID – an online system that allows the payer to see who they are paying before sending the money.
“Proposals for schemes which require banks to cover customer losses do not adequately take into account the incentive this provides financial criminals or scammers to target Australians,” the ABA spokesman says.
So far, the government appears sceptical of moves to make the banks pay. Financial Services Minister Stephen Jones last week said he didn’t support an approach where banks were “always” liable, saying that if banks always reimbursed scam victims it would create a “honey pot” for the scammers.
Jones is right to be sceptical of sweeping changes to make banks “always” liable for scams – that would clearly raise the risk of making scamming more appealing to criminals.
However, there is a convincing case for pushing banks and other businesses to beef up their anti-scam defences in other ways.
For example, the ACCC has called for banks to improve their systems designed to spot payments to scammers, while Jones has promised to introduce tough new industry codes for banks, telcos and social media platforms to reduce economic crime.
These codes will need to have teeth – including meaningful consequences for businesses that don’t comply – if they are to have an impact on the growing wave of online fraud and scams.