Poll shows Kiwis want greater protection against account fraud
Banks and the government are not doing enough to protect New Zealanders against fraud and cybercrime, and people want to see change, according to new polling. There has been an increase in bank fraud and cybercrime over recent years, with a Horizon Research survey last year revealing 274,000 people had experienced fraud or theft from a bank account over the previous year.
Now, Horizon Research’s latest polling has found 12% of adults over 18 have had someone use a bank card, credit card, cheque or other document, without permission, to defraud or steal from them in the last year.
Nine per cent of those polled had been subject to fraud or theft involving a bank account, and 6% had fallen victim to cybercrime with an internet device accessed without permission.
Horizon Research principal Graeme Colman says fraud and cyber crime are now the country’s biggest crimes by volume, and the polling shows a significant number of people are affected by them.
It also shows people are unhappy about the situation, with 39% saying banks are not doing enough to protect from theft and fraud, and 48% saying not enough was being done to protect against cyber crime.
“In essence, people don't feel they’re being well protected by banks or the Government,” he says. “There is a feeling that asking banks to get their ‘a into g’ and do better, as Commerce and Consumer Affairs Minister Andrew Bayly did recently, is not sufficient.”
Rather, 54% want a national anti-fraud and cybercrime centre to be run by the police, while 42% want one run by a new government agency.
While 75% say banks should fund the investigation and prosecution of bank fraud and cybercrime, 70% say the government should. Sixtyeight per cent want the government to regulate to make sure banks offer fraud and cybercrime protection, such as digital identification services, to customers.
Only 25% believe banks should be trusted to self-regulate, while 86% say the Financial Markets Authority (FMA) should regulate to make sure banks provide minimum fraud protection for customers.
Coleman says the results are an example of great common sense from the public.
“Look at the response to ramraids, and then there is this massive crime wave of fraud and cyber crime going on, but next to nothing is being done about it. ‘‘People don’t like it.” Financial commentator Janine Starks says better long-term protection requires a layered system, and a model where banks are liable for fraud.
It is not enough to require the FMA to regulate, or to set up a cybercrime centre and expect it to fix the problem, because it won’t, she says.
“We need all the initiatives suggested in the polling, and more. What we really need is the UK Repayment model here. That would mean banks have to repay fraud, whether authorised or unauthorised.”
Fraud occurs because of holes in the banking system, because banks’ checks or training are not good enough, she says. “Currently banks have limited liability so they don’t protect customers, but if their shareholders were liable for fraud because their systems were not up to scratch, then banks would invest in better protection. “Without that model, banks will introduce a few small initiatives, and then leave it for another 10 years while fraudsters continue to get through the cracks.”
Banks’ self-regulation in this space should also go, and their conduct should instead be regulated by the FMA, with the Banking Ombudsman as a subsidiary of it, Starks says.
There is also a wide range of technology commonly used overseas, such as confirmation of payee, one-time-use credit card numbers, and fraud warnings on payment services, that could be introduced.
New Zealanders have no idea what they are missing out on in bank technology, but it is all tied up with the fact there is a selfregulating payment system here, she says.
“It means there is no incentive for banks to invest in improvements.
‘‘Customers are being left behind in a world where banks have brought in electronic payments but left security in the gutter.”
While there is a lot of talk around fraud systems, it would be easier to simply make the banks liable for fraud, she says.
“If that happens, the banks will bring in every piece of technology, and every system they can, to prevent fraud.
‘‘It’s the only thing that will work effectively to get on top of this, and better protect people over the long term.”
But New Zealand Banking Association chief executive Roger Beaumont says banks announced further commitments to tackle scams last September.
These include supporting the establishment of a centralised, multi-sector national anti-scam centre, introducing an industry-wide ‘confirmation of payee’ checking service, and removing web links from texts to customers. Phase one of the anti-scam centre was up and running in December, but to take it further other sectors, such as government, telcos and social media companies, need to play their part, he says.
“We’re aiming to start rolling out confirmation of payee by the end of the year. Australia is also working on a similar solution and our proposed timeframe aligns with theirs.”
He says banks currently reimburse losses for unauthorised access to bank accounts where customers were not negligent, complied with terms and conditions, and reasonably protected their banking.
“We have also recently agreed to review international best practice for reimbursing customers who lose money in authorised payment scams, and, on the back of that, we’ll look at updating the current reimbursement approach in the Code of Banking Practice.”
Banks already invest significantly in fraud analytics and prevention to identify unusual customer spending patterns, warn customers of potential scams and shut down fake bank websites and phone numbers used in scams, he says.