NZ banks promise more details on implementation of a confirmation of payee service in April

Bank lobby group the New Zealand Banking Association (NZBA) says pledges made by the industry in September to combat scams and fraud against bank customers are progressing, with work now "live" on reducing fraudulent payments to mule accounts, and moves underway to establish a national Anti-Scam Centre.

Against the backdrop of mounting pressure to act, in September NZBA pledged banks would; instigate an industry wide confirmation of payee account name checking service, remove all weblinks from texts to customers, work together to combat ‘mule’ accounts, investigate the sharing of real time information between organisations impacted by scams, and support the establishment of a centralised, co-ordinated, multi-sector national Anti-Scam Centre.

"The first phase of work is now live and is focused on sharing additional information to help identify and reduce fraudulent payments to mule accounts. Banks were already sharing some information on money mules, but the new phase of work will increase the speed and amount of information being shared," NZBA chief executive Roger Beaumont says.

"A money mule is a person, or company, used by criminals to transfer illegally obtained money on their behalf. Money mules are a growing issue in New Zealand."

"It’s been really positive to see the effort our banks have put into this, with some very smart and talented financial crime, legal, privacy and technology experts working together to tackle this issue. We are committed to further progressing this work with support from other agencies by mid next year," Beaumont says.

Other initiatives, including introducing a ‘confirmation of payee’ account name checking service, and removing weblinks from texts to customers are also "progressing strongly," he says.

"We are currently looking at technical options and extensive work is underway to ensure compliance with existing privacy laws. This will enable a timeline for the initiatives, including implementation of a confirmation of payee service, which will allow people making an online payment from one bank account to another to check the name of the account they are paying. We expect to provide more detail by the end of April," says Beaumont.

"Scammers often use weblinks or hyperlinks in text messages to gain access to people’s bank accounts. To help reduce this kind of scam risk, banks have committed to removing links from texts to customers. Some banks are already there, and nearly all will have done this by the end of April, with others following as soon as they can."

Under pressure

The ongoing slowness of the response by NZ banks is unlikely to please critics. NZ fintech Akahu Technologies says it has already; "built a confirmation of payee service that has taken inspiration from these services in the UK and Nordic countries."

NZ banks have been under pressure for failing to plug gaps in their systems, including the ability for people to check the names and account numbers they make payments to match. The United Kingdom introduced name and account number checking, or confirmation of payee, in 2020.

Critics have said NZ banks refusal to plug these gaps mean NZ is seen as a soft touch by scammers, using sophisticated schemes including mock websites and detailed investment pitches, to trick people into paying out sometimes hundreds of thousands of dollars.

In August a Parliamentary committee recommended NZ banks adopt confirmation of payee, ratcheting up the pressure on the industry further.

And last month the Ministry of Business, Innovation & Employment (MBIE) said nearly $200 million was lost to scams during the year to September, an annual increase of just over 8%. In September the Banking Ombudsman said almost a third of its annual investigations related to scams, in which victims' average losses were $57,000.

Aussie banks pledge A$100 million confirmation of payee system

In November Australia's banks, including the parents of NZ's big four banks, launched a Scam-Safe Accord, which they described as "a new offensive in the war on scams." They pledged A$100 million of investment in a new confirmation of payee system to be rolled out across all Australian banks over 2024 and 2025. Confirmation of payee will help reduce scams by ensuring people can confirm they are transferring money to the person they intend to, the Australian Banking Association (ABA) said.  

The ABA said with banks having committed to introduce new and higher protections into their systems, Aussie customers should expect more warnings and delays when paying someone new or increasing payment limits.

Australia's Scam-Safe Accord includes a major expansion of intelligence sharing with all banks acting on scams intelligence from the Australian Financial Crimes Exchange by mid-2024, and joining the Fraud Reporting Exchange. This means critical information will be shared across the banking sector at speed about scam transactions, improving the chances of preventing scams and recovering stolen funds, the ABA said.  

By the end of next year major Aussie banks will use at least one biometric check, such as fingerprint, facial recognition or unique behaviour, for new customers opening accounts online. This will be supplemented by facial recognition initiatives from the Federal Government.

‘Take a sec to check’

Beaumont, meanwhile, says raising public awareness about scams and how to avoid them is a priority for the banking industry.

"Our banks already provide scam information and tips to their customers through a variety of channels, including TV advertising, social media, and on their websites. To complement that we’ll be re-running our ‘Take a sec to check’ radio campaign over the summer holidays. We’ll be encouraging everyone to ‘take a sec’ before making a payment or giving away personal information, just to be sure it’s not a scam," he says.

The information below comes from NZBA.

Help keep yourself safe from scams – take a sec to check before parting with your money or personal information

• Trust your instincts – if it feels wrong, it probably is. Urgency is a red flag – scammers try to rush you.
• Your bank will never ask you for passwords, log-in details, or two factor authentication codes, nor will they send you an email or text message asking you to log in.
• Your bank will never tell you to move your money to a ‘safe’ account, or ask you to use your money to help catch a scammer.
• Think carefully before entering your credit card details online.
• Be cautious with unsolicited texts, emails, or calls – don’t give out details that could be used to impersonate you.
• Don’t click on links or open attachments from people you don’t know, or seem out of character for someone you do know. Hover over links to reveal the actual site.
• Don’t respond to instructions to download unknown software – it could be malware to access your accounts.
• Be careful of deals or investments that sound too good to be true – they probably are. Contact investment firms or businesses via their official New Zealand based websites, and never via online contacts, emails, links, or phone numbers sent to you directly or from other websites on the internet.
• Use strong, unique passwords and PINs for your banking – don’t write them down or record them.
• If you think you’ve been scammed report it to your bank immediately.