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ASIC targeting scams

Australia’s big banks are fighting new proposed obligations from the regulator.  ASIC targeting scams means a push to mandate refunds of billions of dollars lost in online scams.  The banks are firmly opposed because they believe requirements to endure the costs of online fraud could instigate complacency among consumers and lead to even more losses. 


The competition authority has called on central banks to update their processes to stop customers from transferring money to fraudsters after an industry body accused the sector of ‘victim blaming’ to avoid responsibility for scam losses.  Australian banks do not block transactions where the name listed by the sender does not match the recipient’s account details.

The Australian Securities and Investments Commission (ASIC) is targeting scams and has proposed new obligations “to prevent scams or reimburse customers for losses,” and the banks are strongly opposed.  ASIC is currently evaluating the ePayments code, a voluntary code of practice that contains consumer protections for electronic payments, in a process that delays have plagued.

The Australian Competition and Consumer Commission (ACCC) pushed ASIC to include scam prevention as part of its review in 2020.  Still, ASIC ultimately decided against this after fierce pushback from the central banks.

Overall, ASIC‘s interregnum stance has allowed the industry to develop its policies for scam prevention and to monitor the efficacy of the UK approach, with the perspective to enforce new rules if progress is inadequate.  ASIC‘s final position will be released in the first half of 2022, three years after it began.

The rapid rise in scams

Financial scams have increased worldwide during COVID-19, with consumers spending more money online during lockdowns and criminals exploiting security vulnerabilities.

Unfortunately, while online payment systems have innovated over the last two decades, most recently into digital currencies such as crypto, scams and financial crimes, the ACCC reported scam losses of more than $850m last year.  In September this year, it reported an 89 per cent increase in reported scam losses this year. 

Anna Bligh, Chief Executive Officer at the ABA, remarked that with all the benefits of dependence on digital platforms during COVID-19, one negative had been the rapid increase in sophisticated scams.

For the first eight months of 2021, ANZ experienced a 73% increase in scams detected or reported by customers, in comparison to the previous year.

New protections for consumers affected by scams in the UK

The UK regulator recently introduced new protections for consumers affected by scams, including increased liability on banks to reimburse customers who lose money.  As well as a “confirmation of payee” (CoP) implement that forces banks to tag payments where the account name doesn’t match.

We need to embed similar arrangements in payment systems ameliorated like crypto exchanges in Australia, covering banks and innovations.  Without such reforms, consumers have limited means of raising a complaint and pursuing remedies against a bank that has been refractory in preventing scams or failed to take reasonable steps to recover scam losses.

ASIC targeting scams

Both the ACCC and the Consumers’ Federation of Australia (CFA) supported the introduction of a name-checking tool in Australia.  They claim it would address an increasingly prevalent style of scam known as business email compromise, where hackers falsify invoices to request payment to fraudulent accounts using real business names.

If ASIC were to enforce the new proposed regulations, which follow what is implemented in the UK, this would significantly impact the big banks.

The immediate changes would include:

  • Publication of fraud data by banks: Banking groups would have to publish data on their performance concerning scams, on reimbursement levels for victims, and which banks and accounts are used to receive the fraudulent funds; and
  • Improve scam prevention: Industry will improve intelligence sharing to enhance detection and prevention of scams.  
  • Reimbursing victims: Developing how best to make reimbursement mandatory to victims of APP scams once legislative changes are made.

The range of steps the Regulator plans to take will show people which banks and building societies are likely to respond to fraud correctly and put the onus on financial institutions to detect better and prevent scams. 

ASIC would also instigate making reimbursement mandatory for blameless victims.  Then, when the law is changed, actions can take place as quickly as possible to protect the people who need them.

Scams – who is liable?

We need to examine the role of banks and firms operating in the payment system.   The proposal to regulate crypto exchanges more akin to banks also represents an opportunity.  After all, banks and the operators of crypto exchanges are better positioned than individuals to recognise scams and take action to safeguard losses.

For some types of scams, the banks are already guilty.  Consumers do not bear the losses in the circumstance of a scammer directly accessing a bank customer’s account or card to initiate transactions.  Given that banks bear liability, they have an incentive to take steps to reduce losses.

However, for scams where a customer authorises a payment to another bank account that turns out to be fraudulent, the consumer is very unlikely to obtain reimbursement, even if the consumer has taken steps to protect themselves. 

While banks take various steps to recover funds when consumers report such scam losses, systematic bank fraud prevention efforts appear to guard against unauthorised access to accounts, where banks face liability.

If banks had greater liability for scam losses, would things change?  Then, perhaps, banks would have a solid incentive to detect and prevent such losses.  Given their systems and technology, banks are in a much better position to do this compared to individuals.

Current scams

The growing scams issue has seen people lose devastating amounts of money.   However, more needs to be done.  While voluntary industry initiatives have helped some victims, many institutions have yet to step up to the mark and protect people adequately – including social media firms. 

It is impossible to index every scam currently cisculating as the volume is so high and there are so many variations of each scam.  However, some examples of most frequently occuring scams in Australia currently are:

“Flubot” Scam

The “Flubot” scam is circulating on mobile phones across Australia.  A text message is sent to containing a “link” and is often regarding a missed call, voicemail, or package delivery.  Clicking on the link will instigate an attempt to install malware on your device, which gives the scammer access to your passwords and banking information.

Romance Scam

The scammer will nurture a relationship with you online over many months, usually via an online dating app or site.  They will then request emergency money, perhaps to help a sick relative or to travel to meet you.

Remote Access Scam

A Remote Access Scam is usually initiated on the phone.  Scammers call claiming to work for a telecommunications company.  Then seek remote access of your computer to conduct external maintenance.  While obtaining remote access, they will request you log into your internet banking platform and steal your credentials and funds from your account.


Emails that deceive people to give out their personal and banking information.  They are also executed via SMS.  These messages appear to come from recognized businesses and are frequently disguised as banks, or telecommunications providers.  The scammers are attempting to obtain information such as bank account and credit card numbers, passwords, to steal your identity.

Superannuation scam

Scammers can target you online, by phone or by email. Signs of a super scam include:

  • advertisements promoting early access to super
  • offers to ‘take control’ of your super
  • offers to invest your super in property
  • offers of quick and easy ways to access or ‘unlock’ super

Watch out for emails or calls requesting your personal or account details. Scammers may pretend to be a company you know, like your super fund, to steal your identity. They may then use this to transfer your super to an account they can access, like a fake SMSF.

Advanced Fee Scam

An Advanced Fee Scam is a type of upfront payment scam that can be sent from anywhere worldwide.  The scammers offer you a commision in a large sum of money they are transferring out of their country.  However, they first require you to send them funds so that they can commence the transfer.

Lottery Scam

A Lottery Scam is often an email or letter from an overseas lottery or sweepstakes company notifying you have won a large sum of money or prizes in a lottery or sweepstakes that you did not enter.  These scams often use the names of existing overseas lotteries, which may seem legitimate.  However, you cannot win these lotteries unless you have purchased a ticket from an authorised distributor.  The scam’s purpose is to obtain your details and access to your finacials.

Money Mule scam

Scammers send money to you and request you send it to someone else.  They usually want you to send the money via wire transfer or  a gift card.  This scam is often advertised as a ‘work-from-home’ opportunity but is a front for illegal money laundering or attempts at identity theft.

Emergency Response Themed Scam

Scammers attempt to profit from natural disasters and pandemics, such as bushfires or COVID-19, to acquire donations for false purposes.  The scammer keeps the doation for them selves instead of it going to those in need. 

Investment Scam 

Investment Scams take advantage of your trust in your online connections and desire to enhance your wealth.  These scams are purportedly promoted by celebrities or your social media friends and ask you to invest in a wealth-growth opportunity, such as Crypto Currency or Gold.  Unfortunately, most of these promotions are not real and are manufactured with false endorsements to coerce you into relinquishing money that you won’t see again.

Puppy Scams 

Scammers even use puppies to steal your money.  Puppy Scams promote the sale of a pedigree puppy online, and a deposit fee is requested to cover transport and other costs.  The breeder is not authentic and is uaually manufactured or the result of website hacking.  So instead of purchasing a puppy, your deposit is pocketed by the scammer

Keep up to date on the latest scams via the ACCC’s  Scamwatch site.

Vogue Advisory Group – protecting our clients from scams

If you have any suspicions relating to a potential scam, contact us, and our team can help you assess the situation and advise on the appropriate course of action.