2020–21 Annual Review

Scams

AFCA has experienced an increase in complaints involving unauthorised transactions and scams. It’s not only the volume of complaints about scams that’s increasing, but also the sums involved. Some complaints involved losses of over $1 million through multiple transactions.

Scam activity has been exacerbated by the pandemic and is consistent with data collected by the Australian Competition and Consumer Commission (ACCC). The most common scams related to investments, romance, and payment redirection (also known as ‘invoice hacking’ or ‘business email compromise’). However, the scam environment is ever-changing as technology evolves and scams mature, change and shift over time.

AFCA can only consider complaints about the conduct of financial firms that are our members, and in accordance with our Rules. In most cases, we are unable to consider complaints about the conduct of the scammer. It is usually confined to disputes about unauthorised transactions.

When considering complaints about scams, AFCA applies the laws and standards in force at the time of the complaint. AFCA’s approach to scams is likely to be impacted by the outcome of ASIC’s current review of the ePayments Code.

AFCA is proactively engaged with industry, consumer groups and the regulators in efforts to prevent scams.

AFCA has information for consumers at www.afca.org.au/scams.

Case study

In July and August 2019, the complainant made five internet banking transfers totalling $60,000 to a cryptocurrency broker. The complainant said they fell for an investment scam and the bank should not have processed the transfers.

Findings and outcome

AFCA determined that the bank was not required to compensate the complainant for the lost funds because the complainant had authorised the disputed transfers. The bank had warned the complainant about the risks of dealing with the cryptocurrency broker and blocked their account. However, the complainant proceeded to make the transfers from different accounts, despite the bank’s warning.

AFCA found that, while the bank had sought to recover the funds by sending recall requests to the recipient banks, it had unreasonably delayed doing so. However, the bank’s delay had not caused the complainant to suffer loss. The complainant did not notify the bank of the scam until eight months after the transfers were made and it was likely that by that time, the funds had already been withdrawn by the scammer. AFCA awarded compensation of $250 for the stress caused by the bank’s delay in taking action.

Case studies are used to demonstrate AFCA’s approach to an issue and have been simplified for length and clarity.

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