In an age where digital transactions have slowly become an integral part of daily life, the threat of online scams looms large, especially for those who may not be as technologically adept as younger generations.
Fraudsters often target unsuspecting victims using phishing emails, bank scams, investment fraud, romance scams, and identity theft, among many others. The unfortunate reality is that falling victim to these scams can happen to anyone, and the aftermath is often a desperate scramble to recover lost funds.
When Australians fall prey to scams, they often turn to the Australian Financial Complaints Authority (AFCA) as a beacon of hope. AFCA, an independent external dispute resolution service, acts as an ombudsman with the power to compel banks to compensate scam victims.
However, a recent analysis by news.com.au of AFCA’s published decisions over the past financial year has painted a bleak picture for scam victims seeking justice.
The data reveals a stark reality: AFCA ordered banks to fully reimburse scam victims in a mere 4.8 per cent of cases. Bank customers who escalated their case to AFCA’s final decision process lost a staggering $12 million to scams since June last year, but the banks were only required to reimburse $525,000 of that amount.
In 61 per cent of cases, victims received nothing back, and in 28 per cent of cases, victims were awarded ‘non-financial compensation’—a term used when AFCA doesn’t find the bank at fault but acknowledges the customer’s frustrations.
Non-financial compensation is capped at $5,400 or a non-financial remedy in the form of an apology letter.
In one particular case, a woman who lost nearly half a million dollars to scammers was only awarded $250 in non-financial compensation after her bank delayed attempts to recover her funds.

With this reality, news.com.au was prompted to launch the People Before Profit campaign, urging the federal government to follow the UK’s lead.
In October of last year, the UK enacted legislation requiring scam victims to receive compensation within five business days, unless gross negligence is involved—highlighting a sharp contrast to the current situation in Australia.
Insiders suggest that scam victims’ chances are dismal because AFCA is bound by the Australia ePayments code, which is in great need of an update.
Moreover, banks can’t be forced to disclose important information since AFCA isn’t an official court of law. This voluntary disclosure means that banks are unlikely to hand over information that could reportedly jeopardise their case, making it extremely difficult for victims to win.
The plight of scam victims is compounded by the complexity of navigating the system, which is often impossible for the average person to manage without professional help. Cyber expert and forensic investigator Simon Smith notes that a significant portion of his work involves assisting scam victims in their battles with banks at AFCA.
‘They’re glorified mediators. The law isn’t really up there yet,’ Smith said.
One particularly memorable case involved a victim whose identity was used by scammers to open accounts and siphon money. AFCA reportedly ruled that the man had been trying to pay money to himself, and therefore ruled in the bank’s favour, a decision that Smith vehemently disagreed with, highlighting the inadequacies of the system.
As we continue to embrace the convenience of digital transactions, it’s crucial to stay vigilant against scams.
Have you or someone you know been affected by a scam? Share your experiences and thoughts on how the system could be improved. Your stories and insights could help others navigate these challenging situations and push for much-needed change.
Also read: Australia becomes ‘honeypot’ for scammers: Are your savings at risk?
Scams have received so much publicity that everyone should be aware of the pitfalls.
You can not legislate against stupidity though and so some people will always be scam victims.
Scams have been publicized, but not everyone sees these warnings and therefore are not aware of the pitfalls. You CAN legislate for the Financial Institutions to monitor and take action when a perceived scam has taken place.
It is NOT stupidity for people to be tricked by a scam, as they are becoming extremely difficult to detect, EG:- The latest MyGov Scam emails, the look and feel are exactly the same as the Real MyGov website, using certain/majority of the MyGov images within their page.
I know of 3 people who had major fraudulent credit card transactions placed against their cards. None of them had any idea as to how their credit card details had been leaked.
Two of them later found out that they had been the victim of a “Security Breach”, leaking data including Credit Card Details, email address, home address, Banking Details etc.
I had 3 Fraudulent transactions on my Credit Card, it was fixed quickly, but I STILL DO NOT KNOW how and where they got my Credit Card Details.