Banking and online scams

Scams are becoming more sophisticated and causing a growing number of vulnerable Kiwis significant emotional harm and financial loss. This needs to change.

In August last year, Parliament’s Finance and Expenditure Select Committee, of which I was a member, considered a briefing on New Zealand banks’ processes and their consumer protections for scams. Three recommendations were made and this month I announced in Parliament that the Government would be supporting those recommendations.

These were:

  • that New Zealand adopt a system similar to the UK’s Confirmation of Payee scheme as part of the move to open banking;
  • that the Government urge the New Zealand Banking Association (NZBA) to update its Code of Banking Practice to offer further measures that help protect consumers from scams and fraudulent activity; and
  • that a voluntary compensation or reimbursement scheme be investigated for the New Zealand setting, similar to the one operating in the UK.

In late February I wrote to the NZBA, asking that its members take immediate and concerted action to enhance their processes and protections to better safeguard their customers.

As a Government, we are very concerned that the prevalence and sophistication of online scams and fraud is increasing: as of last year, it is estimated that New Zealanders lost nearly $220 million to scams. The financial and emotional toll is huge, with some people losing their entire life savings.

The experience of being defrauded also reduces people’s trust and confidence in our banking sector and in particular to online banking.

Responsibility for tackling scams and online fraud lies with everyone – the Government, the banks, the Police, the telcos, social media platforms, and consumers – but the banks are well placed to take a lead role to protect their customers. It is good to see some of the banks already taking these steps, such as the ASB’s new fraud and scams awareness campaign that is running via billboards, television advertising and on social media.

I recently met with NetSafe (pictured) who do a good job of supporting people who have been the victims of other types of scams, including electronic ones.