Australia’s banks have unveiled a new weapon to help them stop money being sent to scammers in “near real-time”.
The Australian Banking Association announced the new Fraud Reporting Exchange (FRX) platform on Tuesday, which will allow customers to report fraudulent payments as they are being transferred to another bank.
The platform will boost “the likelihood that funds can be frozen and returned to customers”, by streamlining communication between banks and enabling them to move quickly to stop scammers running away with Australian money.
“You might have had a phone call from somebody pretending to be a bank or the tax office or something, and you authorise a scam payment (and) off that money goes out of your account into an account at another bank,” ABA chief executive officer Anna Bligh told the ABC.
“That takes time right now — or used to — for banks to contact each other to get all the details to potentially freeze the account that it’s gone to.
“And that means that, unfortunately, those scammers have already taken it out and sent it overseas or to a crypto platform.”
The FRX would act like an almost-immediate brick wall to stop scammers in their tracks.
More Australians lost more money to scams than ever in 2022, with the Australian Competition and Consumer Commission (ACCC) estimating billions of dollars were swiped from bank accounts.
More recently, corporate watchdog ASIC released a scathing report of the four major banks – ANZ, Commonwealth Bank, NAB, and Westpac – and their responses to the threat of scams.
The report revealed the shocking hit Aussies are taking when it comes to scams, and found the big four reimbursed only 2 to 5 per cent of customer losses – or about $21 million in compensation.
According to the report, about 31,100 customers at the big four banks collectively lost more than $558 million to scams in the 2021-22 financial year.
It also found the banks collectively stopped just 13 per cent of scam payments.
“Given every minute can be crucial in disrupting scams, the launch of the FRX is a major development,” Ms Bligh told The Guardian.
“It means more and more scammers are going to hit a brick wall and adds to the arsenal of anti-scam initiatives under way.”
So far 17 banks, including the big four, have signed up to the platform after a 12 month pilot.
The pilot reportedly showed the time to resolve scam cases dropped by more than half.
Ms Bligh said it was critical for customers to report a scam payment as soon as possible, so they can act as quickly as possible to “try to halt the payment before it gets to the scammers”.
The platform has been welcomed by consumer rights groups, but Consumer Action Law Centre chief executive Stephanie Tonkin says the focus should be on preventing scams in the first place and making reimbursement mandatory through law.
“It can’t be incumbent on consumers to be the ones having to report the scam — what’s needed is for the bank to invest in measures to prevent scams before they reach the consumer,” Ms Tonkin told the ABC.
She said a suite of preventive measures were needed, including: slowing down payment systems to enable checks, checking if “mule accounts” were being used, and “provisions … to identify when there’s a criminal activity occurring”.
Ms Tonkin also said banks should be required to reimburse customers if they have been victims of a scam through no fault of their own and did not act with gross negligence or criminality.
But Ms Bligh said, although the ABA endorsed the need for higher standards “preventing and disrupting scams”, banks should not reimburse customers if they had not done their “due diligence”.