Beaumont added that the five new safeguards represented a prevention-focused approach to combating scams, given that worldwide experience has demonstrated that prevention is the most effective way to protect against scam losses.
“Banks have stepped up their customer protections and will be accountable for those measures, but they cannot take on full liability for scam losses that are beyond their control and may start with a fake ad or chat on social media, or a fake search engine result,” he said.
The New Zealand Banking Association has updated its practice code to include new customer scam protections and compensation.
“We have adopted a prevention-led approach to fighting scams because … that’s the best way to help protect consumers from scam losses,” said chief executive Roger Beaumont.
An update to the Code of Banking Practice that brings in new customer scam protections and compensation will go live on Sunday 30 November.
The retail banks’ new consumer protections include:
- Pre-transaction warnings to customers for certain payments
- A Confirmation of Payee service for customers to check that the name of the person they are paying matches the account number, which finished rolling out in April this year
- Identification of and response to high-risk transactions or unusual account transaction activity, and the ability to delay or block transactions in some cases
- Providing a 24/7 reporting channel for customers who think they’ve been scammed, and responding to protect accounts
- Sharing scammer account information with other banks to help prevent criminal activity, and freezing funds where appropriate, which was announced earlier this month.
The new protections are being delivered through an update to the Code of Banking Practice and target authorised payment scams where people are tricked into making payments to criminals.
Where a bank fails to meet the five new scam protection commitments, it will compensate all or part of the loss for eligible customers.
Banks will also continue to compensate losses for eligible customers where their banking was accessed without the customer’s authority.
New Zealand Banking Association chief executive Roger Beaumont says: “The five new scam protection commitments in the updated Code of Banking Practice show that our banks are serious about helping to keep their customers safe from increasingly sophisticated scams. They’ve invested heavily in this.
“We have adopted a prevention-led approach to fighting scams because global experience shows that’s the best way to help protect consumers from scam losses.
“The new compensation approach recognises shared responsibilities for protecting New Zealanders from scams. Banks have stepped up their customer protections and will be accountable for those measures, but they cannot take on full liability for scam losses that are beyond their control and may start with a fake ad or chat on social media, or a fake search engine result. Industries such as social media companies, global tech platforms, and telcos also have a major role to play in preventing scams. Consumers are also encouraged to take reasonable care to protect their banking,” adds Beaumont.
The updated Code of Banking Practice is available here: https://nzba.org.nz/banking-information/code-banking-practice/code-of-banking-practice/.
ENDS
The Reserve Bank of New Zealand – Te Pūtea Matua (more…)
New Zealand Banking Association chief executive Roger Beaumont says banks asked for an exemption from parts of the AML/CFT Act so they can share information to help stop scams and the harm they cause.
On Monday, the Banking Association said banks had deployed technology to quickly identify and share intelligence on “mule” accounts.
Beaumont said the new fraud intelligence technology works alongside Confirmation of Payee and is part of a broader package of tools, noting there is no single initiative that will stop scams or prevent people authorising payments to criminals.
New Zealand banks are implementing new fraud intelligence technology that will help crack down more swiftly on scammers using “mule” accounts to shift stolen money.