Understanding the most dangerous payment scams
How do payment scams work and how are you at risk?
Online scams are becoming increasingly sophisticated in New Zealand, with more of us at risk of being duped by fraudsters. Payment scams, which trick people into handing over money to criminals, are a growing danger, causing emotional distress and financial pain for victims. Payment scams typically involve an elaborate scheme to trick someone into sending money from their bank account to a fraudster. They come in many different forms, and no New Zealander is safe. Anecdotes show the inventive ways scammers operate. One payment scam saw a fraudster hack someone’s email account, uncover their electrician’s details, and send a fake invoice from their trusted tradie. The victim received an invoice with ‘updated bank details’ and sent over money to pay the fake ‘overdue’ bill. The creative schemes are among the many online frauds committed in NZ. About 62% of New Zealanders encounter a scam every month according to Netsafe’s 2023 report, while 42% of people fell victim to a scam in 2022 according to the 2023 Norton Cyber Safety Insights report. The figures underline the ever-present danger of scams, says Roger Beaumont, chief executive of the New Zealand Banking Association. “Payment scams, often called authorised push payments, trick you into voluntarily making a payment from your account. Invoice scams are a classic example, with scammers going through your email and then producing a fake invoice that looks legitimate.” He urges caution whenever a service provider sends you an email with “updated bank details”. “You should pick up the phone and verify that they have changed their account. Scammers are very clever at hooking you in, so take the time to check. It doesn’t take long, and it could make the difference.” Another common scam is the fake NZTA toll road text message encouraging you to make an online payment. While the scammers only typically ask for a small amount, they may also ask for personal information, using the security details to make a larger withdrawal later. Beaumont says people need to be switched on to the risk of scams at all times, as dodgy texts and emails often arrive when people are in a hurry. “You might read a text quickly and think, ‘yeah, I used a toll road the other day,’” says Beaumont. “So you click on their link which takes you to a fake website where you might make a small payment and end up giving away your login credentials. Then they’ve got full access to your money.” Beaumont says that while banks and authorities are doing their best to stop scammers, it’s a “game of whack-a-mole”. “Global research suggests one in four people have lost money to scammers. What we’re seeing here in NZ is being replicated around the world. Scammers are motivated. Once an alert has gone out on a scam, they reappear where you least expect them.” Once someone has fallen victim to a scam, it can be very difficult to reclaim money, Beaumont says. “Our payment system is very fast. There’s an expectation that when you make a payment, it should be transferred quickly. Once you send money to a scammer, it’s hard to retrieve those funds. Your money often goes to a local mule bank account, which is then used to forward the money. By the time you realise, the money has moved on again, likely overseas.” While scams are becoming all too common, Beaumont says Kiwis can defend themselves by being vigilant and alert to the risks. “The most important thing you can do is not rush into anything,” he says. “We like to say ‘take a sec to check’. No payment should be so screamingly urgent that you have to do it without double or triple-checking.” He offers the following advice to anyone reading emails and texts from companies and service providers. “Check the URL you’ve been sent, whether it looks legitimate and if it seems like the correct URL for the company you’re meant to be paying. Also, check whether the URL has a closed padlock symbol on your address bar.” He adds: “If you’re being rushed to make a payment, that should also be a red flag,” Beaumont adds. “Just trust your instincts. If something feels a bit dodgy and not quite right, it probably is.” “There are so many things you can do. Don’t click on links from people or organisations you don’t know, and remember that your bank will never proactively contact you to ask for your login details.”