Scam complaints overload watchdog

Australians are lodging more complaints about scams and having to wait longer for them to be resolved.

Scam complaints doubled over the past year, sparking a warning from the dispute resolution scheme it risked being overloaded with demand.

The Australian Financial Complaints Authority (AFCA) administers the scheme, which is intended to be a last resort for consumers if they cannot reach a solution by dealing directly with their bank.

However, the volume of complaints to the AFCA shows financial institutions are not resolving issues to the satisfaction of consumers.

Figures released by the AFCA show the scheme received more than 100,000 complaints last year — the largest in its five-year history.

Of those complaints, 8,987 related to scams, up from 4,611 in 2022.

“We believe many financial firms could be doing a better job of handling complaints within their own internal complaints processes, so only the most complex cases reach AFCA – which is the role we are meant to play," AFCA CEO, David Locke, told the media.

“Instead, the volume of complaints reaching us is putting unnecessary pressure on the external dispute resolution system and inevitably causing further delays for consumers.”

Australians lost about $3.1 billion to scams in 2022 — up 80% on 2021 according to a report from the Australian Competition and Consumer Commission (ACCC), which warns true losses are likely to be far higher because at least 30% of victims do not make a report.

Most of the money was lost to fake investment scams, which accounted for at least $1.5 billion in losses.

Older Australians lost more to scams than any other group, with people aged 65 and over falling victim more frequently and losing more money.

The Consumer Action Law Centre’s Stephanie Tonkin has called on the Federal Government to adopt similar measures to the United Kingdom, where banks will be forced to reimburse scam victims and help customers double-check they are sending money to the right person by displaying a warning if the account details do not match up.

“If you’ve got a clear law and framework around when a bank is responsible for reimbursing their customers, that can be dealt with at that bank customer level [and] it doesn’t have to escalate … and then have to overload AFCA,” she said.

Australia’s big four banks reimburse less than 5% of scam victims, according to a 2022 Australian Security and Investments Commission (ASIC) report.

Cyber security expert and victim advocate, Simon Smith, said payee confirmation laws could have prevented thousands of scams from succeeding in Australia.

“In a modern country like Australia; it should have been done decades ago,” he said.

The industry says it’s introducing a confirmation-of-payee system at all banks as well as improved identification checks for new accounts, among other measures.

Customers are warned to be especially alert to these common scams:

• Impersonation scams, where scammers pretend to be from a trusted organisation, such as your bank or insurance company, or a family member, luring individuals into clicking malicious links or disclosing personal information.

• Online shopping scams, where scammers offer attractive, “too good to be true” online shopping deals or hotel and flight discounts, only to steal payment details upon purchase. 

• Charity scams, where scammers solicit donations for fake charities or impersonate genuine charities to exploit people’s generosity.

• Gift card scams, where scammers trick individuals into purchasing gift cards for non-existent products or services.

The ACCC’s Scamwatch website has up-to-date information about scams and how to get help if you have been impacted by a scam. 

Related reading: ACCC, ABC story 1, ABC story 2, Ausbanking 1, Ausbanking 2 

Related viewing: Learn your cyber ABC videos