Need to know
- Financial losses from scams have reached record highs in Australia
- Some scam victims are using crowdfunding and social media to raise awareness of their plight and recoup lost funds
- Most losses result from scams involving bank transfers – advocates and regulators say banks are ideally placed to reduce Australia’s scam toll
Scam victims are turning to social media and crowdfunding platforms to recoup their losses as consumer advocates call on banks to do more to combat rising fraud.
This trend comes as bank transfers have emerged as the most common way for Australians to lose money to scammers. Advocates say Australia should follow the example of other countries by introducing new measures to crack down on fraud in this area.
Scam victims turning to crowdfunding websites
Sydney student Ellen Dickinson, 18, was looking forward to getting her first car – until she and her family realised they'd lost $5000 after transferring the money to a scammer hosting vehicle ads online.
"It was a lot to deal with," says Ellen. "It [took] a bit of processing for me to come to terms [with the fact] that this car that I had just romanticised and idealised didn't actually exist in the first place."
This car that I had just romanticised and idealised didn't actually exist in the first placeScam victim and student Ellen Dickinson
After reports of the scam filed with police and relevant banks failed to deliver any tangible results, Ellen turned to crowdfunding site GoFundMe to try to recoup some of the money.
"I didn't make [the fundraiser] with the intention of getting the full amount back," she says. "I didn't want to attach that responsibility to other people. Essentially, it was just me thinking 'anything will do'."
Student Ellen Dickinson is raising money on GoFundMe after she and her family lost money to a scam involving a new car.
A 'devastating experience'
Ellen's GoFundMe page has so far raised over $850 and she's not the only one turning to the platform after being fleeced by online con artists.
GoFundMe's communications director for Australia, Emily Mulligan, says the organisation is seeing scam victims appeal for help as national scam losses reach new heights.
"Everyday people are preyed upon and their life savings stolen," she says. "Too many Australians are going through this devastating experience and finding there's nowhere to turn for help."
Reported scam losses in Australia reached a record $1.8 billion last year – but with one in three victims estimated not to be reporting what's happened to them, the ACCC believes true losses to be more than $2 billion.
Scammers favouring bank transfers
Ellen's experience of seeing her money disappear by way of bank transfer is not uncommon.
Of the reports of scams received by the ACCC's Scamwatch, it was the most common way victims had paid scammers, with 40% of losses occurring this way.
Mulligan says that GoFundMe has "strict protections" in place to verify scam victims such as Ellen who fundraise on the platform. She says the organisation checks that causes are genuine and any money donated goes to the intended recipients.
Australians who find themselves in this very dark situation can always turn to GoFundMe, but ideally it's the banks who should step up and do moreEmily Mulligan, communications director for Australia, GoFundMe
GoFundMe gave CHOICE several examples of scam victims who launched appeals recently after losing their savings to a wide range of cons, from phoney crypto investment schemes to romance scams.
And while Mulligan applauds scam victims for coming forward with their stories, she says most earn back only a "fraction" of what they lost. She believes financial institutions are better placed to stem the flow of scams.
"Australians who find themselves in this very dark situation can always turn to GoFundMe, but ideally it's the banks who should step up and do more to protect consumers from losing their own money," she says.
Regulators say Australia can do better
GoFundMe isn't alone in calling on banks to do more to help customers who've been defrauded – in high profile cases, victims have taken to social media platforms such as TikTok to document the battles they've faced in trying to get help from their bank.
In the case of one university student who fell victim to a scam, the videos garnered millions of views – something the student involved says led directly to her bank agreeing to reimburse her for the money she'd lost.
Confirmation of Payee
In its latest Targeting Scams report, the ACCC adds its voice to the chorus, arguing that "Financial firms are in a unique position to identify fraud risk and invest in capability to mitigate risks."
The competition regulator says a straightforward way banks could make a difference in stopping scams is by adopting Confirmation of Payee (CoP) technology.
Financial firms are in a unique position to identify fraud risk and invest in capability to mitigate risksACCC Targeting Scams report
This monitors online transfers between bank accounts and checks that the name associated with the recipient (the payee) and their account number matches what the payer has entered in the account name field.
CoP would then immediately warn users that they may not be paying who they thought they were – and, in turn, reduce the chance of bank clients transferring their money to fraudsters using false names.
UK code an example to follow, say local advocates
In the UK, the adoption of CoP by the country's six largest banks from 2019 led to a 35% fall in the value of misdirected payments to scammers and other unintended recipients.
Measures including CoP were first implemented by these banks under a set of voluntary rules – the Contingent Reimbursement Model Code.
As well as implementing CoP, financial institutions signing up to the code are also directed to reimburse fraud victims who have unintentionally transferred funds to scammers, but haven't been "grossly negligent" in the process.
Putting the onus on banks
The UK practice of putting the onus on banks to prevent and remedy certain scam losses is a good example to follow, according to leading Australian consumer advocates.
"We're calling for a similar sort of code here," explains Consumer Action Law Centre (CALC) CEO Gerard Body, who says Australians may wrongly be under the impression that their bank is already running CoP-style security checks.
"People might assume that [banks] are checking because often they ask you to enter the account name, but they're not actually doing any sort of confirmation check to make sure the account numbers you enter are linked to [that] account name," he says.
Call for mandatory rules
Brody says CALC wants to see Australian financial institutions conform to a code similar to the UK's and suggests it's a change the Commonwealth could step in to make happen.
"We're calling on the federal government to have some mandatory rules in place, either through legislation or regulation, when it comes to these obligations," he says.
In its incoming brief for the new Treasurer, released under Freedom Of Information in August, the ACCC concedes the UK system does a better job of preventing scams and supporting victims than Australia's does.
"There are examples of codes in the UK that provide increased protections to victims of scams and better scam prevention in the financial sector," the brief says.
The banks respond
In response to questions from CHOICE, the Australian Banking Association (ABA) did not confirm whether, when facilitating transfers, lenders are cross-referencing account name details entered by the payer to make sure they match those registered with the payee.
But the ABA did explain that more and more banks are giving customers the chance to transfer money using PayID technology.
What is PayID?
PayID lets users give their mobile number, email address or another code to payers instead of their specific bank account details.
Upon entering this identifier, the payer is shown the name of the holder of that account and can make sure they're transferring money to the intended recipient.
The ABA is encouraging the uptake of PayID, saying it's "free to register [and] easy to use," but did not suggest banks should make it mandatory.
New government promises to clamp down on scams
Meanwhile, the new federal government has made scam prevention a core theme in its statements on consumer affairs. In a recent speech, Assistant Treasurer Stephen Jones praised the "decisive" anti-scam schemes adopted by countries such as the UK.
The government has also promised to establish a "National Anti-Scam Centre" to bring together banks, law enforcement and other stakeholders to "respond to emerging scams in real-time" and new mandatory codes to make banks and others "responsible for choking off scams".
Victims would welcome more safeguards
For her part, Ellen Dickinson says she'd appreciate any amount of money reimbursed by her bank and admits CoP technology may have saved her from being scammed in the first place.
"If it was an extra step… I think it would have allowed that room to second-guess what was happening," she says. "I think it's really easy when there's no third-party check – you can just get really carried away."
Stock images: Getty, unless otherwise stated.