As technological advances continue unabated, the way we spend and manage our money is also evolving. These days you can send and receive money instantaneously, and pay for your groceries or fish and chips, phone in hand, without even reaching for your wallet. In fact, many smartphone-savvy spenders don’t even carry a wallet or purse anymore.
It’s very convenient, but is it also risky? And who carries that risk? You? The retailer? The bank?
Some of these questions are not as easy to answer as they probably should be. Gerard Brody, CEO of the Consumer Action Law Centre, believes banks should step up to the plate and take more responsibility when it comes to financial scams.
Writing in The Australian earlier this month, Mr Brody suggested that, with federal Treasurer Josh Frydenberg flagging an overhaul of Australia’s payment system regulations, it’s time to focus on greater protection against scam losses.
In an earlier article on the Consumer Action website, Mr Brody explained that in cases of counterfeit/skimming fraud, fraud on lost and stolen cards and ‘card not present’ fraud the banks bear liability, giving them greater incentive to develop safeguards.
“However,” Mr Brody says, “for scams where a customer authorises a payment to another bank account that turns out to be fraudulent, the consumer is very unlikely to obtain reimbursement … even if the consumer has taken steps to protect themselves. While banks do take various steps to try to recover funds when consumers report such scam losses, systematic bank fraud prevention efforts appear to be focused on guarding against unauthorised access to accounts, where banks do face liability.”
Reported losses from scams increased by 89 per cent in 2021, with those figures relating to the first nine months. Many other scam losses go unreported, with consumers often embarrassed to admit they have been “scammed”.
Mr Brody believes banks have a bigger role to play. In response to the oft-touted solution of more consumer education, he says, “education is unlikely to work because scammers are sophisticated and exploit human trust.
“We need to look at the role of banks and firms operating in the banking system. Banks and crypto exchanges are better placed than individuals to identify scams and take steps to protect losses.”
Mr Brody pointed to recent reforms in the UK that have resulted in an increase in reimbursement rates from 19 per cent pre-reform to 47 per cent in 2020.
How you can reduce my risk of being scammed?
With scam rates on the rise, it’s a good idea to familiarise yourself with the types of scamming to which you may be exposed.
If you’re a regular email user, you have probably seen quite a few ‘phishing’ emails. These are fraudulent attempts to steal your money, your personal details – such as a password or credit card number or both.
In many cases, the emailer will appear to be a legitimate company, such as a bank or other financial institution, by using company logos. Larger email service providers (such as Gmail) have sophisticated detection algorithms that pick up these attempts and will send such emails straight to your email junk folder.
But some still slip through, and it pays (pun unintended) to check things like the email address of the sender or the web address of any links on which you’re invited to click. Often, these will comprise random characters that bear no resemblance to the legitimate company’s name.
The Australian government’s Scamwatch website provides information that can assist you in helping to identify potential scammers and to protect yourself against them.
How you been the victim of a financial scam? Do you have any scam prevention tips? Why not share your experience in the comments section below?
If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.