Banks will now be required to reimburse scam victims up to $500,000 if they fail to adequately warn and protect a consumer from a scam.
The Banking Association has announced five new protections introduced to the Code of Banking Practice, which will be progressively rolled out over the next seven months.
Where a bank fails to meet the five new commitments, institutions will compensate all or part of the loss for eligible customers. Banks will also retain the discretion to pay compensation beyond what is set out in the code.
Banks would also continue to compensate losses for eligible customers when services are accessed without the customer’s authority.
Commerce and Consumer Affairs Minister Scott Simpson said the compensation scheme and stronger safeguards were an “important win for bank customers”.
“New commitments from banks mean that if a bank fails to adequately warn and protect a consumer from a scam, they will reimburse the victim up to $500,000,” he said.
NetSafe chief online safety officer Sean Lyons said stopping scammers requires a multi-faceted approach. (Source: Breakfast)
He said banks would also take a more active role in preventing scams by participating in information-sharing agreements across industry and government and educating people.
“While people still need to remain vigilant and take responsibility for their own online safety, these changes will enable consumers to check a payment is legitimate before transferring money,” Simpson said.
Similar expectations were made clear to telecommunications companies and digital platforms, which scam messages can be carried over.
The scam protection commitments include:
- Confirmation of Payee service for customers to check that the name of the person they are paying matches the account number. This has already begun.
- Pre-transaction warnings to consumers based on the payment purpose.
- Identification of and response to high-risk transactions or unusual account transaction activity, and the ability to block or delay transactions in some cases.
- Providing a 24/7 reporting channel for customers who think they’ve been scammed, and responding to protect accounts.
- Sharing scammer account information with other banks to help prevent criminal activity, and freezing funds where appropriate.
High-risk transactions
NetSafe chief online safety officer Sean Lyons told Breakfast that the announcement was “movement in the right direction”.
“What we’re talking about is banks saying ‘we will look at what we see as high-risk transactions, we will try and educate and inform individuals, we will allow them to contact us 24/7’. All of these things are definitely moves in the right direction to minimise the losses that New Zealanders are experiencing.”
He said dealing with scams was a “multifaceted thing” with lots of moving parts, which could be confusing for many people.
“Knowing that people have a place to go and talk to, finding that advice is also a really key part to stopping people before they get caught in that scam.”
Lyons said it was hard to get an accurate picture of the amount of losses, as people feel a huge sense of shame and embarrassment about falling victim to scams.
“We have to get past that idea that there’s a ‘type’ of person that gets scammed. It’s not an age, it’s not a gender, it’s not what you’re doing. There’s a scam out there that will hit you at the right time.
“If it hits you at the right time, it’s likely to have you fall for it. The scammers keep moving, they keep changing, they keep modifying what they do in order to make us not feel steady on our feet around these things,” he said.
He said the banks sharing information with one another about bad actors was a great step forward.
“We need to be constantly changing what it is that we do to make the scam landscape as difficult and disruptive as we can for scammers and as easy to access support and help for New Zealand consumers.”