Better cooperation between industry and government proposed by Commerce Minister Andrew Bayly to reduce growing online scamming menace, but no new funding made available

The New Zealand government is seeking to address the growing problem of online financial scams, with Commerce and Consumer Affairs Minister Andrew Bayly proposing an all-of-government cooperative and coordinated strategy to protect consumers and businesses in a newly released cabinet paper dated November 11.

However, the proposal doesn't appear to add any new funding for scam fighting.

"There are no financial implications associated with this cabinet paper, as work will be progressed with existing agency resources," Bayly said.

In the cabinet paper released Thursday by the Ministry of Business, Innovation, and Employment, Bayly noted the current government approach is too fragmented and ineffective.

The proposed approach centres on three key pillars: coordinating government agencies, collaborating with industry partners, and developing international strategies to combat digital fraud.

The Government will establish an industry reference group bringing together banking, telecommunications, and digital platform representatives to develop comprehensive anti-scam initiatives.

Inspiration comes from international examples, particularly Australia, which saw a 47% drop in investment scam losses within a year through focused efforts.

Key components of the strategy include:

• Creating a centralised system for reporting and tracking scams
• Improving cross-agency information sharing
• Developing voluntary industry codes for digital platforms
• Enhancing international collaboration with countries like Australia and Singapore

"We are taking a systemic approach that deals with the entire scam ecosystem," Bayly said.

"Combatting individual scams reactively is no longer effective," the Minister added.

Now, Bayly will lead a ministerial group spanning portfolios including Police, Justice, and Communications to drive the strategy. A report detailing more comprehensive prevention and mitigation strategies is expected by April 2025.

The Minister of Commerce and Consumer Affairs - currently Bayly - will be the lead minister to coordinate and drive action to address online scams.

Financial institutions are also being encouraged to develop more robust protections. Banks will implement a confirmation of payee system by the first half of 2025, enabling consumers to verify account details and potentially prevent investment scams.

For small businesses, the government is exploring options to increase online transaction safety, including using the New Zealand Business Number as a 'business trust anchor'.

The Government has agreed to add bank account names to the New Zealand Business Number register. These will sit alongside bank account numbers, to complement the recently implemented confirmation of payee functionality by the financial institutions.

Kiwis suffer large losses in online scam-avalanche

Last year, New Zealanders lost approximately $200 million to scams the document states, based on figures from 11 of New Zealand's largest financial institutions.

This represents a 15% increase from the previous year. The true figure could be much higher, with estimates suggesting only one in five scams are reported to authorities and losses.

Meanwhile, Netsafe and the Global Anti-Scam Alliance data reveal that over 333,000 scam text messages were referred to the Department of Internal Affairs between January and September 2023 the document said.

Bayly cited analysis by social network giant Meta, pointing to many scams originating in Nigeria and South-East Asia. Most of the scams in 2023 circulated on digital platforms and email services such as Meta's Facebook, Instagram and WhatsApp and Google, according to a report from The Global Anti-Scam Alliance (GASA).

Online scamming is a worldwide problem, with GASA saying that for 2024, it tallied up over US$1 trillion in losses.

"Kiwis experienced more scams in 2023 than ever before, with 62% encountering a scam at least once a month," Bayly said.

"We cannot continue to allow sophisticated organised criminals to undermine the trust and confidence of our digital economy," he added.