Need to know
- In the rare cases where scam victims are reimbursed by banks, they're often required to sign non-disclosure agreements
- This prevents the establishment of a public record of how banks are responding to scam cases and the informed development of anti-scams policy
- When victims escalated complaints to the Australian Financial Complaints Authority and it reached a determination, 60% were fully or partially reimbursed
Banks are often the unwitting enablers of scammers, yet they have an abysmal track record of helping customers who've been scammed.
In 2023 we reported that the big banks – ANZ, CBA, NAB and Westpac – had put a stop to a mere 13% of scam payments between May 2022 and February 2023 and had provided reimbursement to customers in a paltry 2–5% of these cases. Customers bore 96% of total scam losses across the sector during this period.
A 2024 ASIC report on 15 smaller banks delivered similarly grim news. Only two percent of scam victims who didn't lodge a complaint with the bank got their money bank. When customers did lodge a complaint, only seven percent were reimbursed. Almost all the money lost to scams in 2022-23 by customers of the 15 banks ($232 million in total) stayed with the scammers.
In the rare cases that scam victims do get their money back, it often comes after first being told by their bank that this won't happen because the scam was their fault
CHOICE also published its own findings in 2024, based on a survey of 280 scam victims asking how their banks had treated them. We weren't surprised at the results. Half said their bank had made no effort to recover their money once a scam was reported, and four out of five victims weren't even alerted by their bank that a scam was underway.
In the rare cases that scam victims do get their money back, it often comes after first being told by their bank that this won't happen because the scam was their fault. CHOICE has reported on several such cases in recent years.
After our stories were published – and in some cases, after a complaint was lodged with the Australian Financial Complaints Authority (AFCA) – the banks reversed course and decided to reimburse. We were unable to report these consumer wins. Why? Because the recipients of the reimbursements were required to sign non-disclosure agreements (NDAs).
Secret payments undermine informed policy
Why do scam reimbursements come with gag orders? One theory is that banks don't want other scammed customers to know that reimbursement is possible if they push hard enough.
Given that the Australian Financial Complaints Authority (AFCA) received 10,928 scam complaints in 2023-24 – an 81% increase over the previous 12 months – publicising these cases could open the floodgates.
Consumer Action Law Centre CEO Stephanie Tonkin says many scam victims that the Melbourne advocacy group has assisted have been made to sign NDAs to get their money back.
"We've had clients who have been ready to talk to the media or have in fact talked to the media and then have been offered a settlement shortly afterwards, but on the proviso that they sign a non-disclosure agreement and no longer go forward with a media story. I've even seen non-disclosure agreements that asked the scam victim to retract statements they made in the media," Tonkin says.
In some cases where the bank's conduct was particularly poor, we see these NDAs prevent customers from making complaints to regulators or pursuing their case further
Consumer Action CEO Stephanie Tonkin
"Banks are using these agreements and going to great lengths to not have certain stories out in the media, possibly because the bank's treatment of the scam victim does not paint the bank in a good light."
The larger issue is the lack of a public record of how banks are responding to scams.
"The problem with using NDAs in the scams context is that there is no transparency over what is happening while we develop policy and obligations," Tonkin says.
"In some cases where the bank's conduct was particularly poor, we see these NDAs prevent customers from making complaints to regulators or pursuing their case further. Sometimes NDAs are accompanied by lowball offers where a customer might have received a much higher amount in compensation had they pursued their case through AFCA."
Tonkin says Consumer Action will be calling on the federal government to place restrictions on the use of NDAs.
Australians 65 and older lose more money to scams than other age groups by a wide margin.
Scam Prevention Framework still a work in progress
This could happen as part of the federal government's Scams Prevention Framework, which came into effect in February this year. It made AFCA the sole external dispute resolution service for scam complaints.
AFCA's remit covers banks and other financial businesses as well as telecommunications and digital platforms providers – the three initial sectors expected to be covered by the framework.
The new measure will require businesses to take 'reasonable steps' to prevent, detect, disrupt and report scams, but the codes covering each sector have yet to be established, and the sectors themselves have yet to be finalised.
The legislation has passed, but the Scams Prevention Framework "is sitting on the shelf awaiting sectors to be designated by the assistant treasurer," Tonkin says. "We hope this happens urgently."
Reimbursement more likely after AFCA complaint
An AFCA spokesperson tells CHOICE that, of the 10,500 scam complaints it resolved in 2023-24, 67% of the cases were resolved between the victim and the financial firm in the first stage of the AFCA process.
"Typically, resolution occurs at this stage because both parties are satisfied with the outcome. If a complainant is not happy with an offer made by the firm at that stage, they can continue their complaint in the AFCA process," the spokesperson says.
The outcome of these cases wouldn't have been published by AFCA.
Of the scam cases that progressed further to the investigation stage in 2023-24, 60% resulted in full or partial compensation for the scam victim. The outcomes of these cases would be published, though the name of the complainant – the scam victim – wouldn't be included.
AFCA data confirms that scam victims are "much more likely to receive partial or full compensation if they escalate a complaint to AFCA".
We do have a standard agreement if parties wish to use it and it does not have a non-disclosure clause
AFCA spokesperson
But signing an NDA can mean you agree not to make an AFCA complaint, since the outcome may be made public
If AFCA becomes aware that a bank is demanding a settlement agreement in a case it's overseeing, "we can review it to ensure that it fits in with our requirements", the spokesperson says.
"We do have a standard agreement if parties wish to use it and it does not have a non-disclosure clause."
But this doesn't stop banks from imposing their own agreements that include such clauses.
Falling prey to a scam can be a life-changing event, where financial loss is exacerbated by a loss of trust in laws and institutions.
AFCA to expand scams oversight
In May this year, AFCA opened a consultation on a proposed expansion of its authority to include the actions – or inactions – of banks that receive fraudulent transactions into accounts controlled by scammers, known as mule accounts.
In 2024, we covered the case of a senior couple who lost $2.5 million to a scammer who had set up accounts at Westpac, ANZ, Commonwealth Bank, and Bendigo Bank. The banks took no responsibility for their services being used by scammers and the couple received no reimbursements.
The AFCA consultation ended in June and the rule change is expected to be approved by the Australian Securities and Investments Commission (ASIC) no later than March 2026. It could mean a big jump in complaints.
Meanwhile, other enforcement actions are underway. ASIC is currently pursuing legal action against HSBC bank for ignoring multiple red flags indicating its customers were being scammed. All told they lost a collective $23 million.
No incentive to protect customers
Australians aged 65 and older continue to lose more money to scams than any other age group.
National Seniors Australia CEO Chris Grice says telecommunication companies, social media platforms, and banks "should all take proactive measures to help older Australians, and others, identify and protect against scams. For example, investing in the necessary technology to build higher protections into systems, multi-factor authentication, as well as sharing information and intelligence".
I am very concerned that, while there's work happening in the background, we don't have any scams laws in place to protect consumers
Consumer Action CEO Stephanie Tonkin
All of this may eventually be required under the Scams Prevention Framework, but as it stands, bank customers and other consumers remain at the mercy of the increasingly diabolical scams industry. And reimbursements that aren't the result of an AFCA determination are off the public record.
"I am very concerned that, while there's work happening in the background, we don't have any scams laws in place to protect consumers," Tonkin says. "Therefore there's nothing incentivising industry to invest in measures to prevent scams and protect their customers."
"Scam victims lose so much more than their money. It's life-changing. And with NDAs, there's no transparency around what's actually happening. There may have been conduct on the part of the bank that a regulator should know about."
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